Non-traditional markets: a viable alternative for diversifying foreign markets
The search for new business opportunities in international markets is an ongoing task for business owners. One of those tasks includes exploring alternatives to explore new destinations for their products.
But these efforts are not always successful. In fact, it is very common that initial sales take place in bordering countries or target markets that are culturally aligned with the source country. These may be markets where their competitors have historically shipped goods, and sellers know there is already a strong acceptance and demand for their products there. But this ends up becoming a crutch for sellers. It also tends to lead to a high concentration in specific export destination markets as a result of everyone focusing on the same destinations.
Today, CARICOM exporters are heavily dependent on the United States. And they are not alone. The numbers speak for themselves: 37% of total foreign sales of the world’s export products are to the United States. Among the main products sent are oils, ammonia, natural gas, polystyrene, frozen lobster, rum, crustaceans, beers, yams and food preparations, to name the biggest sellers.
Countries such as Canada, Jamaica, Chile, Guyana, United Arab Emirates, Argentina, United Kingdom, Netherlands, Switzerland, Brazil, Colombia, Barbados, Spain, France, Belgium, Peru, Mexico, Suriname, China, Santa Lucia, Panama and India receive approximately 85% of the total exports from the Caribbean. They are considered the region’s traditional markets.
On the other hand, there are many destinations outside this list of countries that business owners do not consider as viable destinations, simply because current sales volumes of Caribbean export goods to those markets are low. These markets generally do not represent more than 1% and are recipients of sporadic shipments from Caribbean exporters, which, suggests there is an ample field to investigate, explore, and develop.
For example, South Korea as an export destination represents only 0.69% of total CARICOM exports, including gas, methanol and ammonia, as the three main products, but in the last year, a large participation in the sector of waste and scrap of batteries and copper was lost. However, although shipment volumes are low, unroasted coffee exports grew from USD 291,000 in 2016 to USD 482,000 in 2017, which translates good growth prospects for this Caribbean export product. Something similar is occurring with motor vehicles for transport. In 2017, shipments totaled USD 242,000, up from USD 197,000 in 2016.
Another Asian market with growth potential for Caribbean exports is Japan, which is currently the recipient of only 0.56% of Caribbean total foreign sales. Here, once again, methanol and gas are the products with the greatest presence, but, for example, sales of motor vehicles for transport for 10 or more passengers have steadily risen over the past three years steadily; something that is also seen in the cases of preparations for sauces, pearls, rubber-soled footwear, and rum.
Uruguay, another non-traditional destination, which receives only 0.03% of total Caribbean exports to the world, represents good prospects for mattresses, box springs, and paper or cardboard for recycling. Purchases of these products have grown in the past two years, and Uruguay is an economically stable economy that always welcomed the arrival of new players in its market.
Meanwhile, Paraguay, recipient of only 0.01% of total Caribbean exports, has registered an increase in purchases from the Caribbean in the areas of hair preparations, shampoos, liqueurs, needles, and catheters, highlighting this market as a viable alternative to diversify international sales.
This article touches on some of the markets and sectors that represent real opportunities for pairing Caribbean export goods with non-traditional export markets that Caribbean business owners should explore. Without a doubt, foreign trade requires an ongoing search for new opportunities, leading local business owners to identify the best alternatives for their companies and products with the ultimate goal of becoming global SMEs.
With this in mind, MastercardBiz aims to foster a solid export awareness throughout the Caribbean because we know the importance of exports as a channel for growth. This is why we offer Mastercard Business cardholders a free coaching session with one of our experts in foreign trade services. Contact us today.