Without trade finance, there would be no Indian spices, clothing or jewelry in the US. Or the Apple iPhone in China, less than any other international product at any respectable distance from its origin.
In fact, according to Investopedia, the World Trade Organization (WTO) estimates that international trade has increased by 80-90% due to trade finance.
For this to continue, companies need to incorporate trade finance into their business development strategies.
How did you do that? Learn how you can incorporate trade finance into your business development strategy.
Include domestic trade finance in market penetration and market development
Market penetration and market development are key components of a business development strategy. Market development involves selling more of your services or products to repeat customers.
Market penetration means expanding your product or service to other cities and provinces, but it may involve financing internal trade. Because local and provincial trade agreements may need to be renegotiated.
For example, let’s say you sell jewelry. An adjacent city business can buy your jewelry and sell it to your customers.
You have a long history with this client. And know that your product is selling fast at your customer store. In that case, you could offer the customer more jewelry for the bulk price.
After negotiations, the client agrees. Despite a long, positive customer history, the customer may feel unpaid before exporting jewelry.
Here comes a trade financier or banking institution presenting a letter of credit that promises you will export your jewelry after payment.
Consider using the internet and brick and mortar stores
If you’re already selling more of your products or services to customers, maybe it’s time to move to another channel like the Internet?
If you have a successful ecommerce store, maybe it’s time to start building both a brick and mortar store?
That way, your customers have more opportunities to buy your products.
Trade finance can help you establish new import and export trade deals, especially when it comes to brick and mortar stores, especially when it comes to multiple currencies.
Creating a new product or service for repeat and new customers
With repeat customers, you double the number of products that the repeat customer imports.
With new customers, your new product or service will increase your customer base. It is important that you first create new products for repeat customers before creating new customers, as this implies higher risks.
Again, trade finance can help build greater confidence in this period of growth. Because trade finance or banking institutions can draw up letters of credit by laying down the conditions to be met by the importer and the exporter.
Last thoughts on your business development strategy
Know that growth doesn’t happen in a day; it is more difficult for business to move from penetrating the market to supplying new products to new customers.
That is why we recommend you to grow slowly. But be aware that trade finance can help you increase the number of customers you trade with, no matter where they are.
What do you do for trade finance? How has this helped your business? Share your thoughts, comments, and responses with us.