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Optimism for Growth in 2021 is Uneven in the USMCA Region

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Archives, Banking on Global Trade, Foreign Trade Zones, International Trade

Optimism for Growth in 2021 is Uneven in the USMCA Region

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The past year and the ensuing Covid-19 recession has created a time of uncertainty and instability for economies throughout the world, and especially in the USMCA region, according to a recent Payment Practices Barometer survey from trade credit insurer Atradius.

The most telling data gathered in the region concerns business confidence, where survey results were drastically different in Mexico, Canada and the U.S. The majority of survey respondents in Mexico expect to see an improvement in business performance over the coming months, while in Canada, this picture is reversed with only a minority expressing optimism. The U.S. falls somewhere in the middle.

More than half of all sales transacted on credit

Of the total value of all B2B sales in the USMCA region, 53% were made using trade credit last year. This represents growth, as 44% of businesses told us that they increased the use of trade credit in the months following the pandemic.

Temporary fiscal packages in the U.S. and Canada have helped struggling businesses in the short term. As these are withdrawn in the coming months, we are likely to see a rise in insolvencies.

In this environment of heightened risk, it is important that businesses continually monitor the financial health of their customers and note any early warning signs of insolvency. Some of those signs may include slower payments or late payments. However, it should be taken into consideration that the pandemic has presented additional strain on the supply chain that is often out of any one company’s control, leading to slower payments.

Credit management costs rise sharply

Businesses throughout the USMCA region have reported a rise in the cost of managing their accounts receivable in the months following the Covid-19 outbreak. The sharpest rises were reported by businesses that managed credit and collections in-house.

In part, this rise can be attributed to an increase in the percentage of sales made on credit; simply a greater number of credit sales requires more resources to manage them. However, this may also be an indicator of a deteriorating risk environment, as the longer an invoice remains unpaid, the more resources it takes to collect on it.

For businesses that do not use trade credit insurance or an invoice collection service such as factoring, rising payment delays equate to rising costs. Businesses that do outsource credit management to such services enjoy the certainty that their invoice will be paid and that management costs will not escalate.

Businesses favor domestic markets for credit sales

The USMCA region saw many more domestic credit sales than foreign credit sales in the year following the outbreak of the pandemic, with a 60/40 split in favor of domestic customers. This could have been caused by the supply chain challenges that followed the Covid-19 pandemic, leading to concerns over offering credit to foreign customers.

Businesses outside of the USMCA region should approach trade in the region with optimism. While it is clear that the Covid-19 pandemic is not over, the region is rebounding as expected. If there’s one thing that businesses around the world have learned is that offering more flexibility within their supply chains can help tremendously in the face of unexpected events like the Suez Canal blockage, where its effects were compounded by the pandemic’s supply chain disruptions. Companies that diversify their customer base will be better prepared to capitalize on opportunities should their competitors face unexpected disruptions to their supply chain.

Uneven outlooks for growth

On average, most businesses across the region are positive in their outlook and expect to see improvement in the second half of 2021. Upon a closer examination, a country-by-country comparison reveals a vastly different picture. In Mexico, 81% of businesses surveyed anticipate growth, while 36% of businesses in Canada hold the same view. Businesses in the U.S. fall about halfway between these poles. However, it should be taken into consideration that each country in the USMCA all started from very different places before the pandemic, making their perceptions of recovery different.

Businesses in Mexico were experiencing a recession long before the COVID-19 pandemic and received limited financial support from their government over the past year and a half. In contrast, both the U.S. and Canada started from a stronger economic position going into the pandemic and have received substantial financial help from their governments to stay afloat.

Businesses in both Canada and the U.S. may be bracing themselves for the removal of government fiscal support as well, which will have a much greater impact on their business than those in Mexico who are used to the lack of government support and ready for a rebound.

Post-recession growth is predicted for all of the countries in the USMCA region. It will be interesting to see which businesses thrive and grow during this period and whether the optimism and pessimism expressed by the survey respondents comes to pass over the next year.

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Aaron Rutstein is the Vice President – Regional Director, Risk Services – Americas at Atradius

Archives, Commentary, Global Trade Daily

What Is Your Definition Of Success? 5 Tips To Find It.

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While building and maintaining a thriving business may not be easy, experts in entrepreneurial endeavors say that building a personal brand first is key. In fact, some studies show that today’s consumers trust big brands less and prefer buying from a person they view as authentic and relatable. But before building a personal brand, it’s important for an entrepreneur to define what constitutes their own brand of success, says Ngan Nguyen (www.nganhnguyen.com), an intuitive strategist and author of Self-Defined Success: You Have Everything It Takes.

“Fulfillment and extraordinary results only come when you strive to achieve your authentic success,” Nguyen says. “The key is figuring out what that is and navigating that path. The good news is that we each already have everything it takes to navigate that path. It is essential, because we each have unique gifts, passions, and talents that can create amazing impact in the world and differentiate ourselves and our businesses.”

Nguyen offers five ways to define your own brand of success that can lead to running a successful business:

Get unstuck by unleashing your inner self. “We feel stuck when there is a lack of clarity and the path in front of us is not aligned with our authenticity,” Nguyen says. “Stagnancy and negative happenings force us to look inside ourselves at who we really are and what we really want. Detail those things, and now you’ll have the blueprint to create change and growth. Getting clear on this enables us to lead ourselves and our business to forge ahead on a new path.”

Act on your new authenticity. “Our full potential comes out when we are fully committed to creating a result that fully expresses who we are and what we love,” Nguyen says. “Without that clarity and without acting upon our newly discovered authentic selves, there will always be a bit of reservation. And with that reservation comes lackluster results that are not a reflection of our true potential.”

Keep the vision in mind. Nguyen says much of our untapped potential lies in unused intelligence. “Leaders who leverage their vision can effectively navigate a path to success in a competitive marketplace,” Nguyen says. “Any vision that we can imagine, this infinite intelligence knows how to bring about. The question is how we go about influencing our subconscious in the right way so that it serves us. We do this by holding and keeping an image of a life we desire, and feeding it through repetition long enough that our mind goes to work to aid us in creating it.”

Make your passion your fuel. “The power to create extraordinary results requires this critical ingredient,” Nguyen says. “Passion is contagious, ignites the heart, and motivates the team. It energizes and sparks the pull forward through all barriers, uncertainty, and challenges.”

Have the will to make decisions that move toward your dream. Nguyen says the difference between those who make their dreams happen and those who don’t isn’t always a matter of intelligence but often is a matter of consistent will in decision-making.

“You must have the intention to keep moving forward,” Nguyen says. “There is an energy shift that is experienced in the decision-making process, where a desire goes from wanting to being because you’ve concluded that the dream must come true no matter what.”

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Ngan Nguyen (www.nganhnguyen.com) is the author of Self-Defined Success: You Have Everything It Takes, and the founder/CEO of Cintamani Group, an executive coaching and consulting firm. Nguyen coaches on leadership and empowers entrepreneurs as an intuitive strategist. With over a decade of business strategy experience as an advisor to Fortune 100 companies, Nguyen is also a certified master-level intelligent leadership executive coach with John Mattone and was an analyst for McKinsey & Company. Nguyen graduated with a double honors degree in biochemistry-biophysics and bioengineering from Oregon State University and completed a research fellowship at MIT in nanotechnology.

China
Archives, Global Trade Daily, International Trade

What Every Business Should Know About Selling in China

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Not only is China the most populous country on earth (1.3 billion people), it also has the second-biggest economy in the world by Nominal GDP (14.242 trillion dollars).

As the country has pursued ever more progressive policies to trade (and despite the current trade war between China and the United States) more and more opportunities to sell in the country have arisen to businesses across sectors. If you see China as a potential growth market, here are some of the most important considerations when selling in China.

Seek advice

When looking to enter a foreign market, it is always advisable to seek sage advice, and even look to local businesses who you can partner with. Although you may not wish to go down the partnership route, it is definitely advisable to seek the counsel of businesses who are already operating within the sphere, or groups such as the Global Innovation Forum who often provide free advice regarding penetrating new markets. 

This is a smart strategy because selling in China will be totally unlike selling domestically, or in European markets, for example. Any insights that you can garner will be potentially critical to the success of your sales strategy and approach in China, because as is abundantly clear, you will be operating within a totally different market, both literally and culturally.

“The cultural considerations when accessing new markets should never be overlooked. From the way that you brand and market your products to the way that you negotiate with local businesses and retailers, everything you do will be influenced by different rules: rules to which you are unfamiliar. Get the help you need to pass through this difficult phase,” advises Grant Tarrant, a business writer at Writinity.com and Lastminutewriting.com.

Understand Chinese governmental practices and rules

Although the Chinese Government has grown increasingly receptive to foreign businesses working and partnering in China, rules will still be a little conservative in comparison to the Western approach. Make sure you totally familiarize yourself with what you are expected to adhere too, especially when visiting the country and seeking to operate a sales operation from within China.

For example, you will need to understand the levels of bureaucracy that exist to set up a business entity that operates within China. For example, you may need to set up as a Wholly Foreign-Owned Enterprise (WFOE) to operate, and this can be a costly and timely exercise that may delay you implementing your sales strategy. Forming a business plan which pays close attention to all the requirements (and timeframes) of the Chinese state is essential.

Understand your customer

This piece of advice holds for whoever you are selling too, but obviously your Chinese customer base will be different from your US customer base and will have different expectations. For example, haggling is a standard cultural procedure, and Chinese customers demand to know a product impeccably before they buy, so ensure that your eCommerce operation includes high numbers of images and product reviews: this will be expected.

“If you study Chinese eCommerce sites such as Taobao you will see that it facilitates the Chinese custom of haggling down prices. In the West we are totally unfamiliar with this practice as we are satisfied that the price is the price, Be prepared to change your approach accordingly,” says Rachel Walliston, a marketer at Draftbeyond.com and Researchpapersuk.com. 

Provide impeccable customer support

Chinese customers have come to expect an extremely high level of customer support from their retailers and will demand this from any new business operating within their sphere. Knowing this, make sure you ramp up support efforts, and that, of course, raises questions regarding how you will do this in a new language and culture. Seeking advice from established entities is again the recommended route, and establishing support centers in the country is also best practice. 

Understand the marketing and communication channels

If you go in with a Facebook-based marketing strategy, be prepared to be disappointed. In China the social media platforms are different, for example, WeChat is one of China’s most popular platforms, but barely exists outside of the country. It has been dubbed a ‘super-app’ because it can be used for a multitude of actions, so utilizing such platforms is an absolute must if you wish to successfully penetrate the Chinese market. 

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Ashley Halsey is a writer, editor and international business expert who can be found at both Luckyassignments.com and Gumessays.com. She has been involved in many projects in Asia, and enjoys traveling, reading and cultural exchanges.

generation
Archives, Commentary, Global Trade Daily

What Buying Habits Tell Marketers About Each Generation

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Each generation has unique experiences, lifestyles, and demographics that influence their buying behaviors, financial experts say. And studies show these distinguishing factors often lead to different spending habits between generations.
As a result, many companies are reaching out to consumers and trying to understand — and gain the attention of — these diverse buyers, says Gui Costin (www.guicostin.com), an entrepreneur, consultant and author of Millennials Are Not Aliens.
“This type of multi-generational marketing is the practice of appealing to the unique needs and behaviors of individuals within different generational groups,” says Costin. “In terms of finding and retaining buyers, companies cannot underestimate those generational differences.”
Costin discusses how the buying habits of different generations are influenced by environmental factors and how businesses must focus their marketing efforts accordingly:
Millennials. Now comprising the highest percentage of the workforce, this generation (born roughly from 1981 to 1995) receives considerable marketing attention. Many millennials grew up immersed in the digital world — a big difference from previous generations — and they think globally. “Attract this group early and earn its loyalty by appealing to their belief that they can make the future better,” Costin says. “Traditional mass marketing approaches do not work well with younger consumers. Be sure they know that your organization’s mission speaks to a purpose greater than the bottom line, e.g., globalization and climate change. Give them systematic feedback because they value positive reinforcement at accelerated rates and want more input.” 
Generation X. Following the baby boomers and preceding the millennials, their tastes are different from previous generations. “Because they have greater financial restraints, they often shop at value-oriented retailers,” Costin says. “On the other hand, they have a reputation of being incredibly disloyal to brands and companies. Generation Xers like initiatives that will make things more useful and practical. They demand trust to the extent that if your organization does not follow through once, then you are likely to lose them.”
Baby Boomers. This demographic group, with many now in retirement or nearing it, includes those born from 1946 to 1964. Health is a major concern, and change is not something they embrace. “They appreciate options and want quick fixes that require little change and instant improvement,” Costin says. “They do not like bureaucracy — but give them a cause to fight for and they will give their all. Focus on building value and they will be less price-sensitive. While this group may be aging, they’re focused on breaking the mold of what 60 and beyond looks like.” 
The Silent Generation. Born between 1925 and 1945, this group represents the oldest Americans and, Costin says, typically is labeled with traditional values such as discipline, self-denial, hard work, conformity, and financial conservatism. “It’s important to earn their trust,” says Costin, “as they believe that a person’s word is his or her bond. Patriotism, team-building, and sacrifice for the common good are appealing to this generation. As a group, they aren’t particularly interested in the information age; however, the younger members of this generation are one of the fastest-growing groups of internet users.”
“Communicating with customers in different generations can be challenging,” Costin says. “However, all generations appreciate honesty and authenticity. As environmental factors change, transparency and genuine interactions remain important to everyone.”

Gui Costin (www.guicostin.com), author of the No. 1 Bestseller Millennials Are Not Aliens, is an entrepreneur, and founder of Dakota, a company that sells and markets institutional investment strategies. Dakota is also the creator of two software products: Draft, a database that contains a highly curated group of qualified institutional investors; and Stage, a content platform built for institutional due diligence analysts where they can learn an in-depth amount about a variety of investment strategies without having to initially talk to someone. Dakota’s mission is to level the playing field for boutique investment managers so they can compete with bigger, more well-resourced investment firms.