The weakening of the rupee has garnered multiple reactions from the Indian industry. From a macro-economic perspective it is highly relevant as the import of essential items such as crude oil will become expensive. Having said that, is there a silver lining in all this? Can this scenario prove to be a potential opportunity for small businesses to go for global trade? Let’s consider this. Some Indian products such as handicrafts, apparel have managed to find lucrative markets in the west. What has been tapped for now is however probably a fraction of the larger market that exists for various quality products which are already being locally produced in India.
To tap this opportunity may require a small shift in mindset from Indian SMBs. There is a common misconception among small and medium businesses that exporting globally is only for big international companies that have the capacity and connections to secure and administer major deals. Small businesses often don’t consider trading globally as they feel they are unable to compete with large, well-established companies. However, advances in technology, communications and logistics are such that businesses of any size can now access international markets and a vast range of untapped buyer groups with relative ease.
Central to this is the internet, which has revolutionised the ease of importing and exporting, providing a place where all businesses can reach out to one another, connect and trade securely. The internet penetration in the country is on its growth trajectory with more than 121 million internet users as per an IAMAI report. SMEs exploiting the power of the web will benefit immensely to attract foreign buyers. In the last quarter, we have seen demand for industries like machinery, agriculture and food and beverage for the Indian suppliers.
Having access to a regular and reliable source of quality products is essential to building and sustaining a successful business. The internet and e-commerce have effectively made the whole world our neighbourhood and nearly every citizen a prospective customer; something all businesses should look to seize upon in order to prosper.
For Indian SMEs to be successful in the current scenario and in general, there are five key tips they need to bear in mind:
1. Embrace differences: Many people worry about the cultural issues involved when working with a company based in a different country. It’s always wise to be sensitive to cultural differences, but don’t let those differences put you off getting in touch.
2. Get your finances straight: Get specialist advice on the delivery costs, tax and other financial implications of importing and exporting and make sure this is factored into the price you can afford to pay or charge. Be sure to clearly agree payment terms before any transaction takes place.
3. Know your exchange rates: The depreciation of the rupee in the recent past is going to be beneficial to the Indian exporter community as western countries like the US now pose as attractive options.
4. Safety first: As you would when dealing with any new business contact, do some research. Check the background of the company. Are they members of a trade association or do they have any kind of verification/certification for the products they are developing? Carry out a credit check and ask for references. Beware of companies who just have a PO box or where the phone always goes to voicemail during the country’s standard working hours—bear in mind you may have to get up during the night to try this!
5. Make a plan to get your goods where they need to go: Factor in the time needed to export and plan accordingly. Don’t over-promise. You could consider working with an export professional to manage the process for you, especially if this is something you intend to start doing more frequently. Finally, ensure either you or your supply chain partner has insurance in place to cover the goods while they are in transit.
Khalid Isar is Country General Manager at Alibaba.com, India