INNOVATION, INGENUITY AND INFORMATION - Small Businesses are Taking the World by Storm

Sal Khan started a long distance unstructured tutoring initiative to help a cousin in 2004. As the information, communication and technology scenario evolved so did his coaching methods. Only now his tutoring videos on Youtube were being followed by a larger audience who really were not his target. This was 2006. Soon people (Melinda and Bill Gates, Google, Carlos Slim) started getting involved with this novel initiative and a not-for-profit organization took shape. Today Khan Academy is a phenomenon of sorts in the education domain tutoring on mathematics, history, physics, chemistry and computer science apart from other subjects. It is said that the academy has an audience of 10,000,000+ students world-wide.

In and around the same time, a for-profit company was formed – TutorVista. This India – based company focused at providing personalized tuitions over Internet at a reasonable rate. A tutor is available whenever a student needs help and the company has 2000 teachers from more than 6 countries around the world. Today the company has achieved funding from venture capitalists and thrives.

 
The article is not about education or the Internet, it is about the narrowing down of the world aided with humongous and rapid advancement of information technology tools which is creating opportunities like never before especially for small businesses to reach out to a larger market with seamless ease and poise. Gone are the days of India (and the world) narrated in the beginning of Jhumpa Lahiri’s award winning book The Namesake. Many of us do not even know what an aerogramme looks like or whether it is even made anymore. Information is exchanged in a fraction of a second. An old friend who exports and imports gems and jewelry snapped photos of her latest design artwork using her smart phone and sent it across to her international clients for approval over Whatsapp while catching up with me at Starbucks. On being asked about the restrictions of geographic reach she said, “I can hop on to a plane, meet my client in Middle East or South Asia and return back the same day at a much cheaper rate then what you will spend to visit Guwahati and reach your ancestral home.”

The question is why Export?

Why not? About 40% of our exports are through MSMEs. Are we worried about the risks? What if my buyer does not pay or delays payment? What if the government puts a new clause? What if the consignment is lost? Of course there are risks and regulatory challenges. Have you ever considered that these issues can happen in India too and do happen to small businesses?

The exports market is much more organized compared to what we are dealing with domestically in many cases than we care to accept like return on investment. Take the instance of an average company in developed, OECD or ASEAN country. Most often they have proper website with clear contact details. Nowadays it is trendy to have a formal website with email id at least if not a Twitter handle and Facebook page for businesses. It is now easier to pin a name to face than earlier. Add to that the numerous sources of information available about companies online and many of sources are quite authentic ones. A question might rise, “How do we find who is authentic?” Well do your research online, use your ingenuity with the tools of technology and find out who is the fairest of them all.

Everyone is quite accessible and many countries are well-known for their transparency and fair dealing with anyone thus, creating equitable grounds to do business. Banking systems have allowed for swift electronic transfer of funds or if you have an inkling of risk there is always the option of Letter of Credit. Small businesses are not flush with funds to allow people to frequently travel abroad and find out the specifics. But you can do a fair amount of fact finding sitting in your office and using Google or Skype or Viber, whatever suits your taste and comfort. And these days we have lot of friends staying abroad who can tap into their network for information, the export bodies, trade fairs and of course the social media friend of friend alternative. Sounds amateurish but the contacts are really potent and productive. Have you even tried before being skeptical? An unknown specialist from Sweden once responded to my questions simply because a friend of mine studied with him in the university.

 

You don’t just export because you get paid in foreign currency or domestic market is bleak, you export because there is a larger market and many segments desirous of your product, you have something innovative to offer and with a level of reliability and stability while remaining cost competitive.

Does my product have export potential?

Yes or maybe not in its current form. However, with innovation in the product, process or delivery you might be able to serve a latent demand or a niche that is ready to absorb what you are serving.

 

So where do we start? With information of course! The Internet spoils us with the plethora of data which can be tossed and turned into various forms. Identify who are the biggest exporters. Let me ease it out for you.  

Ideally, one would next try to identify which commodities do these countries export the maximum and where. Or the more sedate option of checking the commodities that account for large chunks of India’s exports. You might think these segments are already full of competition and people have first mover advantage or you can grab a piece of that pie. Only further data analysis can elicit that information. 

You have got the list of top exporting countries. Now find out who the top importing countries. Dig deeper and check what is being imported the most and if there is any correlation to the commodity list of top exporting nations to top importing ones. Glance through www.geohive.com specifically  through: http://www.geohive.com/charts/ec_exim1.aspx and http://www.geohive.com/charts/ec_exim2.aspx

Now look at the domestic data bank. Yes, we have a strong data source. The Ministry of Commerce publishes detailed information on its website. http://commerce.nic.in/eidb/Default.asp

 

The Export Commodity-wise data sheet is professed to be informative by many exporters. The report can give commodity-wise value in lakhs as well as percentage share. Here is the Top 20 list. 

S.No.	HSCode	Commodity	2012-2013	%Share	2013-2014(Apr-Dec)	%Share
1	27	MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION; BITUMINOUS SUBSTANCES; MINERAL WAXES.	33,756,733.35	20.6549	29,321,172.38	21.1656
2	71	NATURAL OR CULTURED PEARLS,PRECIOUS OR SEMIPRECIOUS STONES,PRE.METALS,CLAD WITH PRE.METAL AND ARTCLS THEREOF;IMIT.JEWLRY;COIN.	23,845,853.66	14.5907	17,899,787.75	12.921
3	87	VEHICLES OTHER THAN RAILWAY OR TRAMWAY ROLLING STOCK, AND PARTS AND ACCESSORIES THEREOF.	6,639,918.14	4.0628	5,727,125.40	4.1341
4	29	ORGANIC CHEMICALS	6,591,501.02	4.0332	5,328,321.98	3.8463
5	84	NUCLEAR REACTORS, BOILERS, MACHINERY AND MECHANICAL APPLIANCES; PARTS THEREOF.	6,284,671.37	3.8454	5,291,992.90	3.82
6	30	PHARMACEUTICAL PRODUCTS	5,477,366.87	3.3515	4,836,407.51	3.4912
7	85	ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS,AND PARTS.	5,914,407.47	3.6189	4,699,310.87	3.3922
8	10	CEREALS.	5,256,781.17	3.2165	4,570,097.25	3.2989
9	72	IRON AND STEEL	4,404,214.68	2.6948	4,109,303.16	2.9663
10	52	COTTON.	4,851,430.27	2.9685	4,045,507.63	2.9203
11	62	ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, NOT KNITTED OR CROCHETED.	4,029,065.74	2.4653	3,469,231.81	2.5043
12	73	ARTICLES OF IRON OR STEEL	4,047,761.94	2.4767	2,979,628.53	2.1509
13	61	ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, KNITTED OR CORCHETED.	3,023,817.55	1.8502	2,878,766.73	2.078
14	39	PLASTIC AND ARTICLES THEREOF.	2,802,056.45	1.7145	2,559,989.42	1.8479
15	88	AIRCRAFT, SPACECRAFT, AND PARTS THEREOF.	1,208,208.15	0.7393	2,283,455.01	1.6483
16	3	FISH AND CRUSTACEANS, MOLLUSCS AND OTHER AQUATIC INVERTABRATES.	1,807,127.56	1.1057	2,256,726.83	1.629
17	2	MEAT AND EDIBLE MEAT OFFAL.	1,787,545.30	1.0938	1,991,815.98	1.4378
18	63	OTHER MADE UP TEXTILE ARTICLES; SETS; WORN CLOTHING AND WORN TEXTILE ARTICLES; RAGS	2,198,749.41	1.3454	1,972,658.55	1.424
19	99	MISCELLANEOUS GOODS.	2,412,617.09	1.4762	1,636,181.37	1.1811
20	89	SHIPS, BOATS AND FLOATING STRUCTURES.	2,064,789.59	1.2634	1,460,065.93	1.054

 

Analyze the report further since there are total 98 commodities exported from India. There are lot more other online sources for analysis and definitive conclusion. You can also join export promotion organizations as member and get the benefit of structured information, hand-holding and networking.

There is another way of looking at your product. Maybe there are countries where your product life cycle might just get extended or the markets are less sensitive to price fluctuation.   

Government support is also available for marketing assistance, skill development, and pre-shipment credit in foreign currency. This last factor is pretty inviting.

Innovation, Ingenuity and Information

 

We have to accept that all products are may not be suitable for export or certain segments might be saturated. You need knowledge of the export market, industry trends, regulatory matters and primarily the buying behavior. That’s why I say ingenuity is crucial for innovation and that comes from information. My jewelry exporting friend briefly narrated her example. “The domestic market is there but it is through exports that I earn my margins and fund my growth”, she said. Initially, she started off with the tried and tested path of jewelry exports but with increasing exposure to the foreign market and interaction with end-users she realized that there is a latent market for customized jewelry, exclusive designs. Buyers were ready to pay the premium but the design must be tailored. She did some more legwork to find out about costs, the process of customization and the margins in those countries. Then she started off with one client in Dubai on an experimental basis. Today she has some serious clientele who are ready to pay upfront for her designs and she evasively mentions that there is certain amount of exclusivity of her buyers. When I asked about competition, she says, “This is a business of reliability and quality. People get used to the personalized treatment, comfort and trust. Not many want to rock the boat.”