After watching international markets implode due to the global recession, companies are facing an interesting quandary-there is still business to be had overseas, but where do you invest?
The answers might be surprising. While NH's top five export partners come as no surprise-Mexico, Canada, China, Germany and the United Kingdom (see Page 24)-the countries that experienced the biggest spikes in imports from NH between November 2010 and November 2011 (the latest data) are Mali, Congo and Liberia (see page 22).
But just because those countries saw a dramatic increase in activity doesn't necessarily mean they are hot, emerging markets. The global situation is so in flux, we may have a small country that's not on the radar have a large spike, but it may be because of a one-off sale [by one company], says Tina Kasim, the new program manager at the NH International Trade Resource Center, which helps NH companies penetrate foreign markets. Adds Way, Sometimes a company wants to go to that one obscure country. It could mean jobs, so we have to work on it.
Exports from NH companies hit a record high in 2010, ringing up at $4.4 billion. By November 2011, NH exports reached $3.9 billion in goods and services (ahead of the $3.8 billion of November 2010). We're in a period now where businesses need to be nimble. We have a lot of companies taking a second look at exporting because they have to, says Christopher Way, interim director at the NH Division of Economic Development.
The NH International Trade Resource Center helps companies find markets for their products, navigate the cultural, political and business norms and make key connections. The Center works with several partners, including the U.S. Department of Commerce, the U.S. Small Business Administration, the Small Business Development Center and the International Trade Advisory Council.
Before diving into a deal, companies need a plan. You need to have the resources to get on a plane and go to these countries, have agents, have marketing materials commensurate with the market you are looking at, go back several times, modify your way of doing business to meet cultural norms, decide what your best markets are and develop them, says Dawn Wivell, founder of Firebrand International, a Portsmouth-based international consulting firm and former director of the NH International Trade Resource Center. You can't go over once and expect it will happen by email. You need a well thought-out strategy.
So what are the hot markets? That changes often; however, the state received federal money to expand trade opportunities in China-part of the Obama administration's overall push to open up that market. Beyond that, Wivell suggests developing countries focused on growth and economic diversity. You have to go where there is spending power, she says. Her top suggestions: the United Arab Emirates, Saudi Arabia, Turkey and Brazil.
Focus on China
The International Trade Resource Center received a $300,000 State Trade Export Promotion (STEP) grant through the U.S. Small Business Administration. While part of the money will be used to form a NH Aerospace Consortium, the grant encourages using some funds to strengthen ties with China. With everyone focusing on China, we need to stand out from the pack, Way says. It's a matter of getting folks prepared to get there.
In addition to a trade mission to Canada this year, the NH International Trade Resource Center also is planning one to China to help interested businesses make essential connections there. Exports from NH to China grew 95 percent between 2009 and 2010 to $412 million, though there was a slight dip between 2010 and 2011.
Middle East
Middle Eastern countries are experiencing a development boom and diversifying their economies, Wivell says. The United Arab Emirates (UAE) is the 15th largest trade partner for NH, buying $71 million worth of NH goods and services in 2010. Along with Saudi Arabia, the UAE is working to move its economy from its dependence on oil and gas. Wivell says NH companies have found success in exporting a variety of technologies to the UAE, including optical telescopes, LED and laser technologies, transportation parts and office machines. Water and wastewater treatment and water exploration technologies are also in demand there. Medical devices and technology products are in demand in the Middle East, Wivell says, citing a recent report that found Saudi Arabia has the fourth highest diabetes rate in the world, and that Jordan, Kuwait, and United Arab Emirates were also in the top 20. The UAE has seen a significant increase in exports from NH, especially in wire and cable for telecommunications infrastructure, she says.
When doing business in the Middle East, you need to keep in mind many technical and cultural considerations, Wivell says. For example, in Saudi Arabia, companies need to acquire a certificate of origin authorized by the Saudi consulate and a Saudi company serving as their agent, Wivell says, recommending companies conduct their first trip to Saudi Arabia through the U.S. Department of Commerce or the U.S.-Saudi Arabian Business Council.
There are also many cultural considerations. You need to remember it is an Islamic country. You never show the soles of your feet to a Saudi. It's very insulting. You have to understand they pray five times a day. Alcohol is forbidden. Anything that can be construed as pornography is forbidden, Wivell says, explaining on one trip to Saudi Arabia, the airline blurred a shot of a woman's bare shoulders during an in flight movie. Plus, she says, people do not publicly touch a member of the opposite sex, women are covered head to toe, and women and men don't mingle in meetings. Saudi business will make concessions for western women, she says, but NH businesses should also be prepared to make concessions.
Turkey just misses making NH's list of its top 10 trade partners, ranking 11th with $75 million in exports from the Granite State. [Turkey seems] to be buying a lot. They're a growing economy with a lot of electronics and machinery parts going there, Wivell says.
Brazil
One of the fastest growing economies in Latin America, Brazil is an export market with great potential for NH companies, Wivell says. Brazil clocks in at number 17 of NH's largest trade partners, with Granite State companies exporting $59 million worth of goods there in 2010.
It is the market everyone's looking at right now, Wivell says. They are looking at 5 percent GDP growth. They have a lot of natural resources. Technology and medical products are in high demand in Brazil, as well as telecommunications infrastructure. There are all kinds of commodities going into Brazil, she says. The president put a lot of money into assisting families below the poverty line, creating more disposable income for them and creating more jobs. That's raised more people into the middle class and created a larger consumer base of people who are hungry for products and technologies, and where there are still, in many cases, only two or three choices.
However, Wivell says, Brazil is also a complex market with high tariffs that can drive up prices. You need good strategy to offset the high tariffs and taxes. The best strategy is to demonstrate a commitment to the market. You can set up operations to do some assembly or manufacturing there. There're some good tax free zone incentives, she says. It's important to know why a market is developing the way it is so you can figure out if you have a place in that market. Anyplace there is a growing new middle class, there is opportunity.
Saudi Arabia
Language: Arabic
Population: 26,131,703 (July 2011 est.)
Population Growth Rate: 1.5% (2011 est.)
Labor Force: 7.63 million
Economic Overview:
Saudi Arabia has an oil-based economy with strong government control over major economic activities. It possesses about one-fifth of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 80 percent of budget revenues, 45 percent of GDP, and 90 percent of export earnings. Saudi Arabia is encouraging the growth of the private sector and is focusing on power generation, telecommunications, natural gas exploration and petrochemical sectors. There are about 6 million foreign workers, particularly in the oil and service sectors. The government has begun establishing six economic cities in different regions of the country to promote foreign investment and plans to spend $373 billion between 2010 and 2014 on social development and infrastructure projects.
GDP: $560.3 billion (2011 est.)
GDP Real Growth Rate: 6.5% (2011 est.)
GDPComposition by Sector (2011 est.):
Agriculture: 2.1%, Industry: 67.6%, Services: 30.4%
Imports: $106.5 billion (2011 est.), $88.35 billion (2010 est.)
Import Commodities: Machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles
Import Partners: U.S.-12.4%, China-11.1%, Germany-7.1%, Japan-6.9%, France-6.1%
Source: Central Intelligence Agency's (CIA) The World Fact Book
China
Languages: Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect), Yue (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese)
Population: 1,336,718,015 (July 2011)
Population Growth Rate: 0.493% (2011)
Labor Force: 816.2 million (2011)
Economic Overview:
In 2010, China became the world's largest exporter. In recent years, China has renewed its support for state-owned enterprises in sectors it considers important to economic security, explicitly looking to foster globally competitive national champions. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. China in 2010 stood as the second-largest economy in the world after the U.S., having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceed those of the U.S. China is second to the U.S. in the value of services it produces.
GDP: $6.989 trillion
GDP Real Growth Rate: 9.5% (2011)
GDPComposition by Sector:
Agriculture: 9.6%, Industry: 47.1%, Services: 43.3% (2011)
Imports: $1.664 trillion (2011), $1.3 trillion (2010)
Import Commodities: Electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals
Import Partners: Japan-12.6%, South Korea-9.9%, U.S.-7.3%, Germany-5.3%, Australia-4.3% (2010)
Source: Central Intelligence Agency's (CIA) The World Fact Book
Congo
Languages: French (official), Lingala (a lingua franca trade language), Kingwana (a dialect of Kiswahili or Swahili), Kikongo, Tshiluba
Population: 71,712,867 (July 2011 est.)
Population Growth Rate: 2.6% (2011 est.)
Labor Force: 34.79 million (2011 est.)
Economic Overview:
A nation endowed with vast potential wealth, it is slowly recovering from decades of decline in part due to corruption and conflict. Much economic activity still occurs in the informal sector, and is not reflected in GDP data. Renewed activity in the mining sector, the source of most export income, boosted Kinshasa's fiscal position, but an uncertain legal framework, corruption and a lack of transparency in government policy are long-term problems. The Democratic Republic of Congo signed a Poverty Reduction and Growth Facility with the IMF in 2009 and received $12 billion in multilateral and bilateral debt relief in 2010.
GDP: $15.3 billion (2011 est.)
GDP Real Growth Rate: 6.5% (2011 est.)
GDPComposition by Sector:
Agriculture: 37.5%, Industry: 27.6%, Services: 35% (2011 est.)
Imports: $9.0 billion (2011), $7.8 billion (2010)
Import Commodities: Foodstuffs, mining and other machinery, transport equipment, fuels
Import Partners: South Africa-19.2%, China-12.5%, Belgium-9.2%, Zambia-8.8%, Zimbabwe-6.9%, France-5.8%, Kenya-5.8% (2010)
Source: Central Intelligence Agency's (CIA) The World Fact Book
Mali
Languages: French (official), Bambara 80%, numerous African languages
Population: 14,159,904 (July 2011 est.)
Population Growth Rate: 2.61% (2011 est.)
Labor Force: 3.241 million (2007 est.)
Economic Overview:
Among the 25 poorest countries in the world, Mali is a landlocked country highly dependent on gold mining and agricultural exports for revenue. The country's fiscal status fluctuates with gold and agricultural commodity prices and the harvest. Mali remains dependent on foreign aid. Economic activity is largely confined to the riverine area irrigated by the Niger River and about 65 percent of its land area is desert or semi desert. Industrial activity is concentrated on processing farm commodities. Mali is developing its cotton and iron ore extraction industries to diversify its revenue sources. Mali has invested in tourism but security issues are hurting the industry.
GDP: $11 billion (2011 est.)
GDP Real Growth Rate: 4.5% (2010 est.)
GDPComposition by Sector:
Agriculture: 38.9%, Industry: 21.5%, Services: 39.6%
Imports: $2.4 billion (2010), $2.1 billion (2009)
Import Commodities: Petroleum, machinery and equipment, construction materials, foodstuffs, textiles
Import Partners: Senegal-13.6%, France-11%, Cte d'Ivoire-10%, China-6.8%, South Korea-5.2% (2010)
Source: Central Intelligence Agency's (CIA) The World Fact Book
United Arab Emirates
Languages: Arabic (official), Persian, English, Hindi, Urdu
Population: 5,148,664 (July 2011 est.)
Population Growth Rate: 3.3% (2011 est.)
Labor Force: 4.1 million
Economic Overview:
The UAE has an open economy with a high per capita income and a sizable annual trade surplus. Successful efforts at economic diversification have reduced the portion of GDP based on oil and gas output to 25 percent. In April 2004, the UAE signed a Trade and Investment Framework Agreement with Washington and in November 2004 agreed to undertake negotiations toward a Free Trade Agreement with the U.S. However, those talks have not moved forward. The country's Free Trade Zones-offering 100 percent foreign ownership and zero taxes-are helping to attract foreign investors. Dependence on oil, a large expatriate workforce, and growing inflation pressures are significant long-term challenges.
GDP: $358.1 billion (2011 est.)
GDP Real Growth Rate: 3.3% (2011 est.)
GDPComposition by Sector (2011 est.):
Agriculture: 0.7%, Industry: 59.4%, Services: 39.8%
Imports: $185.6 billion (2011 est.), $161.4 billion (2010 est.)
Import Commodities: Machinery and transport equipment, chemicals, food
Import Partners: India-17.5%, China-14%, U.S.- 7.7%, Germany-5.6%, Japan-4.8% (2010)
Source: Central Intelligence Agency's (CIA) The World Fact Book
Brazil
Languages: Portuguese (official and most widely spoken)
Population: 203,429,773 (July 2011 est.)
Population Growth Rate: 1.1% (2011 est.)
Labor Force: 104.3 million (2011 est.)
Economic Overview:
Characterized by large and well-developed agricultural, mining, manufacturing and service sectors, Brazil's economy outweighs all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile. In 2008, Brazil became a net external creditor and two ratings agencies awarded investment-grade status to its debt. Brazil's high interest rates make it an attractive destination for foreign investors. Large capital inflows during the past several years have contributed to the rapid appreciation of its currency and led the government to raise taxes on some foreign investments.
GDP: $2.5 trillion (2011)
GDP Real Growth Rate: 2.8% (2011 est.)
GDPComposition by Sector (2011 est.):
Agriculture: 5.8%, Industry: 26.9%, Services: 67.3%
Imports: $219.6 billion (2011 est.), $181.7 billion (2010 est.)
Import Commodities: Machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics
Import Partners: U.S.-15%, China-14.1%, Argentina-7.9%, Germany-6.9%,
South Korea-4.6% (2010)
Source: Central Intelligence Agency's (CIA) The World Fact Book
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