Revamping trade and investment promotion organizations in business ecosystem 4.0
The digital revolution has already transformed our economies and our society. New technologies and tools have entered our daily lives, companies have new ways of doing business. Digital platforms now provide services that used to be the bread and butter of retailers, travel agents, banks and many others. Though these changes are creating immense opportunities for many, they pose risks to economic growth and inclusiveness where the business ecosystem is not set up to harness the power of new technological possibilities.
Exports and investment of small and medium-sized enterprises (SMEs) can be a case in point. New technologies can ease some difficulties typically faced by SMEs when exporting, such as matching sellers and buyers. They can also pose new challenges in terms of access to and adoption of technologies as well as increased risks or vulnerabilities.
Trade and investment promotion organizations (TIPOs) have traditionally played an important role in helping SMEs export. They have done so by providing market information, matching buyers with sellers, supporting access to new markets and promoting investment. Because of the increased use of information technologies, it is possible that soon many of these services will be offered by platform providers. TIPOs could then become obsolete.
In theory, platforms can provide many of the services traditionally offered by TIPOs and are therefore likely to have a profound impact on TIPO business models. It is uncertain, however, whether they have the incentive to do so and whether their results can match those of TIPOs. They do not aim to brand a country or enhance its exports, nor are they necessarily perceived as a third party that can grant quality or reliability.
These differences, combined with the difficulties SMEs still face in accessing data and adopting new technologies, signal the continued relevance of TIPOs. The following points discuss some of the dimensions TIPOs should consider to become effective players in this new context.
TIPOs can use new technologies to learn more about clients; offer tailored information about partners in their networks; provide training and other services; and modernize their traditional matchmaking services.
For instance, the Australian Trade and Investment Commission has developed an online tool that helps SMEs assess their readiness to export, complementing face-to-face interactions. The Swiss export promotion agency, Switzerland Global Enterprise, created Export Digital, a platform to help exporters acquire useful information about consumer behaviour in foreign markets.
Hong Kong’s Support and Consultation Centre for SMEs (SUCCESS), for example, is an e-platform that offers free advisory services for SMEs. In Latin America, connectamericas.com, an initiative of the Inter-American Development Bank, was set up with the support of online search provider Google, logistics firm DHL, credit-card company Visa and online retailer Alibaba. It provides access to communities of clients, suppliers and investors worldwide.
Similarly, the West African Economic and Monetary Union (UEMOA) recently launched connectuemoa.com, a platform offering information about business opportunities within the region and providing a directory of relevant companies for members to network with potential partners.
There is scope for TIPOs to offer more powerful and effective services by linking with data platforms, since they are capturing information on firms’ activities and performance at a scale never before seen.
With online platforms providing an increasing array of services, the potential of such partnerships goes well beyond traditional TIPO services. For instance, export promotion agencies may want to seek partnerships with logistics or financial service providers to offer a package of services to exporters. Platforms developed by TIPOs in Sri Lanka (EDB eMARKETPLACE) and Malaysia (eWTP) in collaboration with private sector agents such as DHL and Alibaba offer multiple business services such as shipping quotes, online promotion, cloud computing and talent training.
Additionally, partnerships with existing digital platforms could allow for on-demand in-market services such as warehousing, logistics, e-payments and credit and insurance services at a low overhead costs for TIPOs.
In this rapidly changing environment, TIPOs must manage uncertainty and risks associated with the choice of technology, tools and partners. Embracing technology requires investments in time and money and involves risks as to the timing and selection of technologies. The same is true when it comes to selecting partners, since it can also have a lock in effect. TIPOs can also have a role in helping SMEs assess and manage these risks.CREATING TRUST
The role TIPOs can play in generating trust is multi-layered and should not be underestimated. They can, for example, help their clients to make best use of the platforms that are relevant to their business. This can include providing information on such platforms and their reliability as well as training on how to use them. TIPOs can also generate trust in their country’s economy by helping foreign investors, buyers or international platforms find reliable local partners. They can create their own platforms that showcase the products and services of potential exporters to signal quality, reliability and creditworthiness of companies. By offering explicit TIPO backing the TIPO then becomes a third-party quality signaller.
In addition, TIPOs can support the development and maintenance of a favourable regulatory environment for new technologies and data use.
In sum, new technologies have the potential to greatly enhance and expand the services traditionally provided by TIPOs along multiple dimensions. This calls for revamping TIPOs to match the challenges and leverage the opportunities of the business ecosystem 4.0.
This article is based on ITC flagship publication SME Competitiveness Outlook 2018: Business Ecosystems for the Digital Age, accessible free at www.intracen.org/SMEOutlook.