Final Editing of China and India Exports

8/4/2019 Final Editing of China and India Exports

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Introduction to exports

The term export is derived from the conceptual meaning as to ship the goods and services out ofthe port of a country. The seller of such goods and services is referred to as an "exporter" who is

based in the country of export whereas the overseas based buyer is referred to as an "importer".

In International Trade, "exports" refers to selling goods and services produced in home countryto other markets.[1]Export goods or services are provided to foreignconsumersby domestic

producers.[2]

Export of commercial quantities of goods normally requires involvement of the customs

authorities in both the country of export and the country of import. The advent of small trades

over the internet such as through Amazon and e-Bay have largAnygoodorcommodity,transportedfrom one country to another country in a legitimate faely bypassed the involvement

of Customs in many countries because of the low individual values of these trades [citation needed].

Nonetheless, these small exports are still subject to legal restrictions applied by the country of

export. An export's counterpart is animport.

Definition

Export of services consist of all services rendered by residents to non-residents. In national

accounts any direct purchases by non-residents in theeconomic territoryof a country are

recorded as exports of services; therefore all expenditure by foreign tourists in the economicterritory of a country is considered as part of the exports of services of that country. Also

international flows of illegal services must be included.

Advantages of exporting

Ownership advantages are the firm's specificassets, international experience, and the ability todevelop eitherlow-costordifferentiated productswithin the contacts of itsvalue chain. The

locational advantages of a particular market are a combination ofmarket potentialand

investment risk.Internationalizationadvantages are the benefits of retaining acore competencewithin the company and threading it though the value chain rather than obtain to license,

outsource, or sell it. In relation to theEclectic paradigm, companies that have low levels of

ownership advantages either do not enter foreign markets. If the company and its products are

equipped with ownership advantage and internalization advantage, they enter through low-riskmodes such as exporting. Exporting requires significantly lower level of investment than other

modes of international expansion, such asFDI. As you might expect, the lower risk of exporttypically results in a lowerrate of returnon sales than possible though other modes of

international business. In other words, the usual return on export sales may not be tremendous,but neither is the risk. Exporting allows managers to exercise operation control but does not

provide them the option to exercise as much marketing control. An exporter usually resides far

from the end consumer and often enlists various intermediaries to managemarketing activities.
http://en.wikipedia.org/wiki/Export#cite_note-0http://en.wikipedia.org/wiki/Export#cite_note-0http://en.wikipedia.org/wiki/Export#cite_note-0http://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Production_theory_basicshttp://en.wikipedia.org/wiki/Export#cite_note-1http://en.wikipedia.org/wiki/Export#cite_note-1http://en.wikipedia.org/wiki/Export#cite_note-1http://en.wikipedia.org/wiki/Good_(economics_and_accounting)http://en.wikipedia.org/wiki/Good_(economics_and_accounting)http://en.wikipedia.org/wiki/Good_(economics_and_accounting)http://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Importhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Economic_territoryhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Economic_territoryhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Economic_territoryhttp://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Porter_generic_strategies#Cost_Leadership_Strategyhttp://en.wikipedia.org/wiki/Porter_generic_strategies#Cost_Leadership_Strategyhttp://en.wikipedia.org/wiki/Porter_generic_strategies#Cost_Leadership_Strategyhttp://en.wikipedia.org/wiki/Porter_generic_strategies#Differentiation_Strategyhttp://en.wikipedia.org/wiki/Porter_generic_strategies#Differentiation_Strategyhttp://en.wikipedia.org/wiki/Porter_generic_strategies#Differentiation_Strategyhttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Gap_analysis#Market_potentialhttp://en.wikipedia.org/wiki/Gap_analysis#Market_potentialhttp://en.wikipedia.org/wiki/Gap_analysis#Market_potentialhttp://en.wikipedia.org/wiki/Financial_riskhttp://en.wikipedia.org/wiki/Financial_riskhttp://en.wikipedia.org/wiki/Internationalizationhttp://en.wikipedia.org/wiki/Internationalizationhttp://en.wikipedia.org/wiki/Internationalizationhttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Licensehttp://en.wikipedia.org/wiki/Licensehttp://en.wikipedia.org/wiki/Licensehttp://en.wikipedia.org/wiki/Outsourcehttp://en.wikipedia.org/wiki/Outsourcehttp://en.wikipedia.org/wiki/Eclectic_paradigmhttp://en.wikipedia.org/wiki/Eclectic_paradigmhttp://en.wikipedia.org/wiki/Eclectic_paradigmhttp://en.wikipedia.org/wiki/Foreign_direct_investmenthttp://en.wikipedia.org/wiki/Foreign_direct_investmenthttp://en.wikipedia.org/wiki/Foreign_direct_investmenthttp://en.wikipedia.org/wiki/Rate_of_returnhttp://en.wikipedia.org/wiki/Rate_of_returnhttp://en.wikipedia.org/wiki/Rate_of_returnhttp://en.wikipedia.org/wiki/International_businesshttp://en.wikipedia.org/wiki/International_businesshttp://en.wikipedia.org/wiki/Marketing_managementhttp://en.wikipedia.org/wiki/Marketing_managementhttp://en.wikipedia.org/wiki/Marketing_managementhttp://en.wikipedia.org/wiki/Marketing_managementhttp://en.wikipedia.org/wiki/International_businesshttp://en.wikipedia.org/wiki/Rate_of_returnhttp://en.wikipedia.org/wiki/Foreign_direct_investmenthttp://en.wikipedia.org/wiki/Eclectic_paradigmhttp://en.wikipedia.org/wiki/Outsourcehttp://en.wikipedia.org/wiki/Licensehttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Internationalizationhttp://en.wikipedia.org/wiki/Financial_riskhttp://en.wikipedia.org/wiki/Gap_analysis#Market_potentialhttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Porter_generic_strategies#Differentiation_Strategyhttp://en.wikipedia.org/wiki/Porter_generic_strategies#Cost_Leadership_Strategyhttp://en.wikipedia.org/wiki/Assetshttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Economic_territoryhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Good_(economics_and_accounting)http://en.wikipedia.org/wiki/Export#cite_note-1http://en.wikipedia.org/wiki/Production_theory_basicshttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Export#cite_note-0


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Disadvantages of exporting

ForSmall-and-Medium Enterprises(SME) with less than 250 employees, selling goods and

services to foreign markets seems to be more difficult than serving the domestic market. The lackof knowledge fortrade regulations, cultural differences, different languages andforeign-

exchangesituations as well as the strain of resources and staff interact like a block for exporting.

Indeed there are some SME's which are exporting, but nearly two-third of them sell in only toone foreign market.[17]The following assumption shows the main disadvantages:

Financial management effort: To minimize the risk ofexchange-ratefluctuation andtransactions processes of export activity the financialmanagementneeds more capacityto cope the major effort

Customer demand: International customers demand more services from their vendor likeinstallation and startup of equipment, maintenance or more delivery services.

Management mistakes: The management might tap in some of the organizational pitfalls,

like poor selection of oversea agents or distributors or chaotic global organization.

Communication technologies improvement: The improvement of communicationtechnologies in recent years enable the customer to interact with more suppliers whilereceiving more information and cheaper communications cost at the same time like 20 years

ago. This leads to more transparency. The vendor is in duty to follow the real-time demand

and to submit all transaction details.
http://en.wikipedia.org/wiki/Small_and_medium_enterpriseshttp://en.wikipedia.org/wiki/Small_and_medium_enterpriseshttp://en.wikipedia.org/wiki/Small_and_medium_enterpriseshttp://en.wikipedia.org/wiki/Trade_regulationhttp://en.wikipedia.org/wiki/Trade_regulationhttp://en.wikipedia.org/wiki/Trade_regulationhttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Export#cite_note-16http://en.wikipedia.org/wiki/Export#cite_note-16http://en.wikipedia.org/wiki/Export#cite_note-16http://en.wikipedia.org/wiki/Exchange-ratehttp://en.wikipedia.org/wiki/Exchange-ratehttp://en.wikipedia.org/wiki/Exchange-ratehttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Exchange-ratehttp://en.wikipedia.org/wiki/Export#cite_note-16http://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Trade_regulationhttp://en.wikipedia.org/wiki/Small_and_medium_enterprises


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India Experiences Incredible Growth in 2010/2011 Exports

In 2010 to 2011, the Indias exports went up by 37.5%, which is the fastest growth theyve seen since they gained their

independence from the United Kingdom in 1947. Due to the nations efforts to diversify their markets and increase

trade within its own region, it shipped $245.9 billion in goods to other countries. This number went beyond the

governments initial goal for the year of $200 billion

With the strength of the past year behind them, the government set an even higher goal of $450 billion for the 2013-

2014 year, which will be a 25% rise in exports.

In March alone, the nation sent out $29.1 billion worth of goods, which is the highest amount for one single month

ever.

This is great news for the Indians after their exports fell by 3.5% in 2009 to 2010 because of the international

financial crisis.

India ranked 10th in services exportworldwide: Report

India achieved 10th rank in export of services worldwide, while emerged as the 20th biggest merchandise

exporter in 2010, according to a latest WTO report.

In 2009, the country stood at the 12th and 22nd position globally in services and goods exports,

respectively.

In value terms last year, India exported services and merchandise worth USD 110 billion and USD 216

billion respectively, the 'World Trade Report 2011' said.

India's goods exports went up by 31% in 2010, helping the country to expand its market share to 1.4%

from 1.2% in 2009.

According to industry experts, increasing demand for Indian goods in new markets like Latin America and

Africa are helping in boosting the country's exports.

"This (improvement in India's ranking) is because our exports are doing reasonably well in new markets

like Latin America, Middle East and other Asian markets. We are focusing on these markets," CRISILPrincipal Economist D K Joshi said.

Apex exporters body FIEO said that the diversification of India's exports basket are also helping in

increasing the shipments.

"Slowly, India's rank is going to increase...," Federation of Indian Export Organisations (FIEO) President

Ramu Deora said.


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Further the report said, globally China ranked first in terms of merchandise exports followed by the US

and Germany. In services export, the US is on the top slot followed by Germany and UK

New Delhi's services exports share in the world exports increased to 3% in 2010 from 2.6% in 2009.

Engineering and petroleum exports contribute about 40% in the total exports. "Earlier, there contribution

was low," Deora said.

DEPARTMENT OF COMMERCEECONOMIC DIVISION

EXPORTS & IMPORTS : (PROVISIONAL)

(US $ Million)

AUG APRIL-AUG

EXPORTS (including re-exports)

2009-2010 13586 66326

2010-2011 16644 85273

%Growth 2010-2011/ 2009-2010 22.5 28.6

IMPORTS

2009-2010 22449 106605

2010-2011 29679 141894

%Growth 2010-2011/ 2009-2010 32.2 33.1

TRADE BALANCE

2009-2010 -8862 -402792010-2011 -13035 -56620


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DEPARTMENT OF COMMERCE

ECONOMIC DIVISIONEXPORTS & IMPORTS : (PROVISIONAL)

(Rs. Crores)

AUG APRIL-AUG

EXPORTS (including re-exports)

2009-2010 65670 322424

2010-2011 77509 392811

%Growth 2010-2011/2009-2010 18.0 21.8

IMPORTS

2009-2010 108506 518024

2010-2011 138211 653828

%Growth 2010-2011/2009-2010 27.4 26.2

TRADE BALANCE

2009-2010 -42836 -195600

2010-2011 -60702 -261017


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China economy

In the first half of 2011, a phenomenon has appeared in the Chinese economy in which decreases

in export volume have been coupled with increases in prices. Chinese officials from the Ministry

of Commerce and other experts say this phenomenon hints at structural shifts underway in the

Chinese economy whereby certain high-end manufacturers are increasing prices while those on

the bottom are forced to lower prices despite rising raw materials costs.

Enterprises engaged in low-end manufacturing and homogeneous competition receive pressure

on both ends and even have to reduce the prices of their products. Experts say internal market

mechanisms probably will work, and some enterprises with weak bargaining power will bewashed out.

According to data released by China's Ministry of Commerce on July 21, in the first half of 2011,

China's total import and export volume of mechanical and electrical products and processing

trade products exceeded that of the same period of 2008 and set a new historical record.


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The export volume of mechanical and electrical products was a little more than 498 billion U.S.

dollars, and it increased by 20 percent, 62 percent and 23 percent compared to that of the same

period of 2010, 2009 and 2008, respectively.

Actual foreign demand distorted by export decrease, price increase

"Although the overall exports of China are still growing, the growth rate is slowing down," said

Zhang Ji, director of the Department of Industries under the Ministry of Commerce.

The export growth rate of mechanical and electrical products and that of processing trade

products decreased to 13.8 percent and 11.9 percent, respectively, in July 2011, and they

declined by 21.5 percentage points and 20.8 percentage points compared to the growth rates in

January 2011. The export volume of processing trade products in April and May decreased by 3

percent and 0.3 percent compared to that of their previous months. And more than one-third of

the top 200 processing trade enterprises of China showed a negative export growth. Some large-

scale export enterprises, such as Tech-Front Computer, Compal Electronics and Wistron Group,

have seen exports decline for several successive months.

Another thing we should pay special attention to is that some export products have decreased in

volume while they have increased in price, which can distort the actual foreign demand reflected

by the exports. For example, in the first five months of 2011, the export scales of garments, dry

goods, shoes, bags and suitcases decreased by 50 percent, 10 percent, 4 percent and 51 percent,

but since their prices increased, the export volumes of the commodities increased by 14 percent,

18 percent, 12 percent and 10 percent, respectively.

According to preliminary statistics, in the first half of 2011, the price factor had increased

exports of mechanical and electrical products by between 8 and 10 percentage points, and if the

price factor were not calculated, exports increased by only between 10 and 12 percent, lower

than the 26 percent of the average level of the past 10 years.

In the context of China's overall exports, a decrease in volume coupled with an increase in prices

is quite outstanding.

Wang Shouwen, director of the Department of Foreign Trade under the ministry, said in the first

half of 2011, the average price of China's export products increased by 10.2 percent, which is

10.7 percentage points higher than that of the same period of 2010, and the export scale

increased by 12.5 percent, which is 23.4 percentage points lower than that of the same period of

2010. For labor-intensive products, this phenomenon is especially obvious.


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The increase export product prices is mainly due to rising costs and by the fact that enterprises

engaged in low-end manufacturing and homogeneous competition are suffering.

"The rising of export product prices is mainly caused by the rising of costs. However, some

enterprises still have not effectively improved their profit abilities. As the business environmentbecomes tense, the ability of enterprises to endure will differentiate," Zhang said.

According to feedback from some industries and enterprises, the main difficulties are an

increase in overhead costs of the materials of production, heavier pressure caused by policy

adjustments and some other aspects.

Ge Guorong, vice-general manager of the Hangzhou Zhongce Rubber Co., Ltd., said: "Compared

to the end of 2010 or beginning of 2011, the prices of the raw materials of rubber industry have

increased by more than 30 percent on average. The financing cost is also increasing. Although

getting a loan is still not too difficult, we cannot enjoy the preferential interest rates any more at

this time. Therefore, the operation cost will inevitably increase."

Facing the complex external environment, the enterprises that can withstand the pressures will

be differentiated from those that cannot. Companies that have their own brands and core

technology are least affected and have greatly raised the prices of their export products.

Prime examples of the type of industries that are more likely to endure pressures are the heavy

equipment, agricultural machinery, engineering machinery and machine tool industries. These

industries focus on general trade and have established overseas marketing and customer service

networks. Therefore, they have obtained the basic power to set prices and have increased the

prices of their products by 10 percent, 10 percent, 15 percent, and 14 percent, respectively.

Wang said that the business performances of these companies and industries showed that due to

structural adjustment policies, China's foreign trade growth is beginning to be driven by the

prices and quantity of export products in coordination.

However, companies that are weak in research and lack marketing channels have only raised the

prices of their products slightly and have suffered declines in competitiveness. For example,

China's motorcycle export prices have just risen 3 percent to 5 percent, but the price difference

between Chinese and Indian motorcycles has already dropped to around 10 percent. The raw

material costs in China's auto industry have risen 10 percent, but the export prices of entire cars

have only risen 5 percent.


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Companies that specialize in low-end processing in a homogeneous environment have been

under both upstream and downstream pressure, and have been forced to cut prices to ride out

the hard times. The domestic notebook computer industry, which specializes in processing

trade, has lowered laptop export prices by more than 8 percent.

The domestic color television industry, the upstream market of which is dominated by South

Korean companies and the downstream market dominated by foreign brands, has lowered

product export prices by 19 percent. The domestic shipbuilding industry, which mainly

manufactures bulk carriers, has lowered product export prices by 30 percent due to declining

international demand.

"China's trade surplus reached more than 44.9 billion U.S. dollars in the first half of the year,

down nearly 19 percent from a year earlier. However, the structure of the trade surplus remains

largely unchanged," Zhang said.

Statistics showed that China's surplus from the processing trade in the first six months of the

year rose nearly 20 percent from a year ago to nearly 164.3 billion U.S. dollars, about 3.7 times

the country's total trade surplus. Meanwhile, the surplus in the mechanical and electrical sector

rose more than 21 percent from last year to more than 138.5 billion U.S. dollars, about three

times the total trade surplus. In addition, China's trade surplus with the United States and the

European Union reached nearly 84.6 U.S. dollars and nearly 63.1 U.S. dollars in the past six

months, up nearly 4 percent and nearly 2 percent, respectively, from a year ago.

"If the trade surplus formation mechanism remains unchanged, it will be difficult to offset the

processing trade surplus brought about by international industrial transfer and to achieve trade

balance simply by increasing general trade imports," Zhang said.

Zhang predicted that China's surplus from processing trade will continue to increase, and its

surplus with the United States and the European Union will also rise slightly. Its trade surplus in

the second half of the year may be higher than that in the first half.

"China's trade surplus is related to serious structural problems. Its trade surplus is mainly with

the United States and the European Union, which has affected its economic and trade relations

with major trading partners," Wang said. To achieve trade balance, China adjusted import tariffs

on certain commodities twice in the first half of the year alone, lowering the import tariffs on

673 commodities, including refined oil.

Zhang said that China's foreign trade situation in the second half of the year remains to be seen,

but it is highly possible that the growth in the export of mechanical and electrical products as


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well as processed products may slow. Market forces will come into play in this process.

Specifically speaking, companies with weak capacity to bear difficulties will be eliminated, while

those with strong capacity to bear difficulties will improve their own competitiveness through

structural adjustments.

"China is now in a crucial period for economic restructuring. It should create a stable policy

environment, and encourage companies to conduct structural adjustments and upgrading,"

Zhang said.

Documents

Final Editing of China and India Exports