How countries are overcoming the challenge of global distribution
Many companies feel that distributing to other countries causes more problems than it is worth, but they are missing the great potential that exists. They often worry about the red tape that they have to deal with at customs, along with high fees and hidden fees that can make receiving the shipments problematic for their customers. In some cases, the customers would end up refusing the shipments, and companies see it as too large of a risk to keep trying to ship overseas.
Better Global Supply Options Needed
An improved trading system has the potential to better the entire world, making companies more prosperous and providing goods and services to areas where they may not have existed before. Information from the U.S. Small Business Administration shows that those companies that export their goods are typically 20% more productive than those who do not. In addition, they create around 20% more jobs than companies that do not export.
Consider the proliferation of the Internet over the past decade or so. People have been able to shop online and find products from around the world. In the coming decades, even more people will be shopping online. This means businesses today need to think about how they can service the customers of tomorrow – no matter where they might live in the world. By 2020, experts expect there to be around five billion people on the web. Many of them will do at least a portion of their shopping there.
What Are the Current Problems?
Distribution has several factors holding it back right now. There are a number of trade laws in effect that slow down business. The tariffs for importing goods into other countries are relatively low now. While that is certainly a step in the right direction, companies still need to contend with a number of other fees charged at customs. In fact, the customs fees are often high enough today that they simply replace the tariff cost. The cost is just a portion of the problem. Customs also requires a substantial amount of paperwork, and this slows the process even further.
Solutions on the Horizon
The paperwork might not be a problem for too much longer though. Currently, the United States is trying to negotiate two different trade agreements:
1. TTIP: Transatlantic Trade and Investment Partnership
2. TPP: Trans-Pacific Partnership
The idea behind these agreements is to make trade easier and faster between the European Union as well as 11 countries in Asia. The countries involved account for more than 60% of the world GDP. Companies in other parts of Asia, for example, do not have the high taxes and tariffs imposed on them as the United States does. By reducing the number of restrictions and the financial barriers between countries, it will help to make companies from the United States far more competitive in other parts of the world.
Removal of tariffs is only a portion of what these agreements will do. In addition, they will make the procedure of getting through customs simpler overall. They will also help to strengthen the intellectual property rights of companies that are importing their goods, no matter what they might be.
Things Are Changing
It seems as though things are changing for the better in terms of exporting and distributing to other countries. The Internet has helped the world to connect, and these new agreements can help to make the actual act of selling to other nations much easier and more profitable. Reaching people all around the world has never been as easy as it will be in the coming years. Contact us today to learn more about how these changes could affect your company.