Export, import substitution

DURING this series I have been looking at a number of issues relevant to all small and mediun enterprises and identify both the opportunities and challenges associated with each issue.

Topics covered have included planning; staff and recruitment; customers and service; marketing; competition; new products and services; being well organised; collaborating with others; understanding and analysing risk; managing the money; going into business with family or friends; grants, loans and investment; expansion and growth; technology and exporting.

Today my focus is on exporting and import substitution.

We are nearing the end of this series of challenges and opportunities for SMEs.

Many SMEs believe that exporting is beyond them — they see themselves as too small and believe that exporting is too complicated and challenging.

The main challenge when considering the possibilities of exporting is our own mind-set — there are several Pacific wide organisations that are set up to support Pacific SMEs explore export markets in countries like New Zealand, Australia and China.

Your local chamber of commerce, or your export association if you have one, will have the necessary contact details.

Obviously, the decision to export is a big one and must not be made lightly.

We need to understand the needs of the market we are planning to export to; be clear about rules and regulations; understand the competitive environment; be clear about issues like packaging, labelling, shipping, storage; understand the local economic and taxation situation.

Don’t even consider an export market unless you have good contacts and reliable agents to act on your behalf and, preferably, you have been there and have a good understanding of how business is done.

Collaborating with other small businesses might be a very good export strategy so you can combine strengths and opportunities.

Most countries have opportunities for you to display your goods such as trade fairs or exhibitions.

Ask your chamber for contacts in the countries you are interested in.

In the Pacific the tendency is to focus on exporting to New Zealand or Australia but don’t forget the rest of the Pacific — the markets may be small but they all need products and services that they do not produce themselves.

For many local SMEs there may be more opportunity in import substitution — simply identifying what your local community or economy imports from elsewhere and deciding to produce it yourselves.

Look round you, look on the shelves of your local shops and begin to think about what you could make or produce.

Why do we buy white rice from overseas when we have many other healthier substitutes grown here?

Why do we import tins of coconut milk or coconut water when the South Pacific has many coconuts?

Why do we sell eggs from battery chickens in New Zealand when we have perfectly good free-range chickens in our own communities?

Why do we sell imitation handicrafts from overseas rather than our own authentic ones?

Why do we throw away oversupply of fruit and vegetables in season without thinking about what else we could do in the way of preserving, adding value, drying, freezing?

Yes, it will take effort to establish an import substitution programme, but it will have a long-term economic benefit to the country and its local communities.

Technologies exist today to allow for small scale production. Seek information from your Pacific neighbours and explore collaboration.

Get into the habit of asking questions — what else can we grow; what else can we make; what other services could we provide; what skills do we have access to that maybe are underused; what equipment and machinery do we have access to; what natural resources could we make better use of?

Over dependence on imported goods and services is not a good or viable economy strategy for any community. As business owners we need to think creatively for economic solutions that will not only benefit ourselves but all the people who are our potential customers.

If you need help with your own exporting or import substitution plans or you want some feedback on your own practices, then please get in touch.

* Chris Elphick is partner in Breadfruit Consulting, formerly Learnfast Pacific, supporting the development of a range of businesses and organisations in Melanesia and other parts of the Pacific. He is an experienced trainer, coach and business mentor and has years of experience of working with small and medium enterprises. He and his partner Hazel Kirkham live in Vanuatu.

Breadfruit Consulting have partnered with Fiji Entrepreneur to develop mentoring services for new and young entrepreneurs.

If you have an issue or query related to this article, please contact Chris at chris@breadfruitconsulting.com or text to +6785500556

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