Global Framework In Export

Trade Barriers

• A Government induced restriction on free flow of international trade.

• A kind of protectionist measure to sustain domestic manufacturers.

• Can be a retaliation by a nation against another nation for defaulting foreign policy objectives.

• Involves imposition of duties on tradable goods and services making imports expensive.

• Can leads to Trade War like situation, if not controlled.

• Generally, higher income countries tend to have less trade barriers compared to lower income countries.

• Creates revenue for the importing country which can be used for economic development.

• Countries like Bahamas, Gabon, Chad, Bermuda impose maximum barriers.

• Countries like Singapore, Macao, Hong Kong, Switzerland impose least barriers.

Types of Trade Barriers

Let us understand the meaning and types of tariff and non tariff barriers.

Tariff Barriers

Tariff barriers involve taxes on imported goods, typically aimed at generating government revenue and protecting domestic industries by making foreign products more expensive. There are various types of tariffs, such as ad valorem (a percentage of the item's value), specific tariffs (a fixed amount per unit), and compound tariffs (a mix of both). These taxes increase the cost of imported goods, encouraging consumers to opt for domestic products, thereby shielding local industries from foreign competition. 

Non-Tariff

Non-tariff barriers (NTBs) are trade restrictions that don’t involve direct taxes but still inhibit imports. NTBs include quotas, which limit the quantity of imports, licensing requirements, and strict health, safety, or technical standards that foreign goods must meet. Additionally, subsidies provided to domestic industries can give them an unfair advantage over international competitors. NTBs also include complex customs procedures that delay the entry of foreign goods. While tariffs are transparent and easy to measure, NTBs are more subtle and often harder to quantify, yet they can be equally effective in restricting trade. As global trade agreements limit the use of tariffs, many countries increasingly rely on NTBs to protect their domestic markets. However, both tariff and non-tariff barriers can strain international trade relationships, potentially leading to trade disputes or even trade wars. 

Tariff Barriers

1. Specific Duty: A duty of specific amount that depends on weight, volume, surface, etc. It shows tax to be imposed on quantitative basis. Eg. Import duty of 150% on import of Grape Wine bottles of 1 Ltr (other than Sparkling Wine) from USA levied by India.

2. Ad Valorem Duty: A duty levied on the assessed value of the product. Duty depends on the sum total of set of item being imported. In short, higher the value - higher the tax. Eg. 30% Import Duty on import of SUV automobile from Japan levied by India. 

3. Compound Duty: Inclusion of both specific and ad valorem duty. For Eg. Specific Duty of Rs. 100 per kilogram of Copper plus 5% ad-valorem duty.

4. Seasonal Duty: Duty varies with change in the price of the commodities is called Seasonal Duty. Also called as Sliding Scale Duty. Mainly applicable to agricultural produce due to the volatility in its price. Eg. Increase in the price of onion powder derived by dried onion may head to a strategic increase or decrease in its import duty.

5. Countervailing Duty: Its a kind of Additional Customs Duty or Special Additional Duty over and above the Basic Customs Duty. Imposed by the government in cases where exports (of the exporting country) are subsidised due to which imports (of the importing country) become reatively cheaper. As a protectionist measure to safeguard the domestic manufacturers and to equalize the price, CVD is imposed. Eg. Basic Customs Duty @ 5%, Additional Customs Duty @ 12.5% and Special Additional Customs Duty @ 4% levied by India on import of Refined Copper.

6. Revenue Tariff: A tariff designed to provide revenue to the controlling government is called revenue tariff. Generally, imposed on consumer goods and luxury goods which posses high demand. 

7. Safeguard Duty: Duty imposed to safeguard the domestic industries from heavy imports. A high duty is imposed so as to discourage imports or to make imports equalize or expensive than domestic product.

8. Anti Dumping Duty: Duty levied on goods dumped by foreign exporters. Exercised from time to time through notice applicable on certain products dumped by certain countries. Eg. India levying 3.12$ per USB Flash Drive being dumped by China / Taiwan (2015-2020).

9. Customs Handling Fees: Indian Government charges 1% of value of goods towards custom handling / landing charge in addition to BCD.

10. Social Welfare Surcharge (India): Started in 2018 in the place of Education Cess levied at 10% of the value of goods over and above BCD and ACD.

11. GST (India): IGST is applicable on goods imported to India over and above BCD, ACD and SWS.

12. NOTE: As per Geneva Convention, 1952, import of sample goods are exempt from import duties. For duty free clearance, the supply should be free of charge where value of individual sample should not exceed INR 5000/- and aggregate value should not exceed INR 60,000/- per year or 15 units of samples in a year. However, the Prototypes of engineering goods can be imported even if the value is more than INR 5000/-. 

Non - Tariff Barriers

1. Trade License: Various countries impose licenses to certain imports. In short, an importer requires to hold a license issued by an official authority to import certain goods. In India, restricted goods require license which is valid for 24 months (capital goods) and 18 months (raw material components) which is renewable. Products like precious - semi precious stones, seeds, plants, pharma, chemicals, insecticides, reserved for SSI, canalized items and prohibited items.

2.  Embargo and Sanctions: A situation where a country or a group of countries officially limit or ban trade (impose sanction) and trade related activities with a specific country. Highly strategic, political and economical. Eg. The USA has imposed a sanction against Cuba (Human Rights Abuse), Iran (Human Rights Abuse, Terrorism and Nuclear Program), Cuba (Human Rights Abuse), Sudan (Human Rights Abuse, Terrorism and Civil War), North Korea (Human Rights Abuse and Nuclear Program) and Syria (Human Rights Abuse and Civil War)

3. Quota System: A quota is a government-imposed restriction on trade that limits the number or monetary value of goods that a country can import or export during a particular period. Eg. Indian government fixed an import quota of 7 Lakh Tonnes of pulses for the period from 1st April 2020 to 31st March, 2021. 

         Types of Quotas:

• Tariff Quota - Import of commodity up to certain quantity is allowed  to be imported duty free or low rate. But imports beyond this quantity  is subject to higher duties.

• Unilateral Quota - Limit is placed on importation of a commodity for a given period without any negotiations with foreign government.

• Bilateral Quota - Limits or quotas are set between the exporting and importing country through a mutual agreement.

• Mixed Quota - Producers are required to utilize certain proportion of domestic raw materials along with imported parts and materials to produce finished goods. (Domestic Content Requirements)

4. Product Standards: Specific standards are set by importing country which has to be followed by the exporters of the exporting country. Standards are designed to ensure safety, quality, compatibility and consistency. Eg. FSSAI, ISI, CE, etc. Also, special packaging standards laid by SASO and EU for gaining access to goods in their regions.

5. Product Labeling: A lot of countries impose specific guidelines for labeling on the packaging. It can be inclusion of regional language, kind of ink used to mark and label, non use of codes, etc. India requires information and declaration for importing packaged food. Information like trade name, descending order of ingredients composition by volume/weight, name and address of manufacturer, net weight, batch number, month and year of manufacture and packaging and expiry, maximum retail price, vegetarian/non-vegetarian symbol and coloring material used. Declaration like name and address of the importer, name of the product and quantity printed in English or Hindi, either on the package or in an additional wrapper. Products which undergo further process and not for end consumer need not have to follow these guidelines. 

6. Packaging Requirements: Certain nations require specific type of packaging (product packaging and protective packaging) of goods including material, design, reusability, etc. Eg. EU insist on recyclable materials in packaging. Also, excessive amount of SVHC is not legal to be traded in EU markets.

9. Environmental Regulations: Environment safety is a major concern with growing trade. Several nations impose standards with respect to environment safety so as the product carry a safe disposable action. 

10. Trade Blocs: Various trade agreements tend to create a blockage for other non-member nations by making entry in those markets difficult. 

11. State Trading Organizations: Certain products in certain nations are traded only by the Government agencies and not openly by private players. Such situation creates a blockage for potential importers and exporters.

12. FOREX: Constant fluctuation of foreign exchange rate also becomes a treat to exporters and importers carrying a risk of tremendous loss due to currency devaluation.

Economic integration is the unification of trade and economic policies between various nations, through the partial or full abolition of tariff and non-tariff barriers on trade. This involves various stages right from a trade agreement to a complete economic union. Every Trade Agreement between nations is backed by a strategy. A strategy to build strong political relations along with bridging gap of goods, services, capital and labor. When nations get into terms of agreement, there is a smooth functioning of trade practices, hence contributing to economic development.

In simple terms, trade becomes easy and less complicated between nations when they integrate with a certain objective. This can prove beneficial to traders with regards to stabilized demand and supply and even the government with respect to relations. Lets understand stages of Economic Integration with global examples.

I. Preferential Trade Agreement

A Preferential Trade Agreement (PTA) is the first stage of economic integration between countries. It provides preferential access to specific products by reducing tariffs for participating nations, fostering easier trade compared to non-member countries. PTAs can be bilateral, involving two countries, or multilateral, involving multiple nations. While tariffs are not completely eliminated, they are significantly reduced to encourage trade among member countries. This arrangement allows member states to benefit from enhanced market access and improved competitiveness, often serving as a stepping stone toward deeper economic cooperation, such as free trade agreements. 

Examples

1. Economic Cooperation Organization (ECO): Eurasian # intergovernmental # 1985 # development # trade promotion # investment # AFG-AZB-IRN-KZK-KYR-PAK-TJK-TUR-TKM-UZB

2. SAARC Preferential Trading Arrangement (SAPTA): South Asian # 1993 # trade liberalization # cooperation # BGD-BUT-IND-MAL-NPL-PAK-SRL

3. India-MERCOSUR PTA: A significant agreement between India and the South American trade bloc MERCOSUR (Argentina, Brazil, Paraguay, Uruguay), aimed at reducing tariffs on various products​.

4. ASEAN Preferential Trading Arrangement: Established in 1977, this agreement focuses on increasing trade among Southeast Asian nations through tariff reductions and other measures like harmonizing policies for trade development​.

5. CARICOM-Dominican Republic PTA: This agreement between Caribbean nations and the Dominican Republic facilitates trade liberalization in goods and services and promotes investment​.

II. Free Trade Area

A Free Trade Area (FTA) is an arrangement among member nations to eliminate barriers to trade, allowing for the free movement of goods and services between them. In an FTA, member countries agree to remove tariffs, quotas, and other trade restrictions on products traded within the group, thereby facilitating easier access to each other’s markets. However, tariffs are still imposed on goods from non-member nations, which helps to protect the economies of member countries from external competition.

Examples

1. Caribbean Community (CARICOM): 15 Caribbean nations # promote economic integration # sharing benefits equally # bilateral agreements with AUSTRALIA, INDIA, JAPAN, MEXICO, SOUTH KOREA, USA, VIETNAM, etc.

2. China with SRI LANKA, HONG KONG, NEW ZEALAND, SINGAPORE, etc.

3. India with SINGAPORE, MALAYSIA, THAILAND, SRI LANKA, etc.

4. NAFTA: 1994 # CANADA-MEXICO-USA

5. Gulf Cooperation Council (GCC): 1981 # BAHRAIN-KUWAIT-OMAN-QATAR-SAUDI ARAB-UAE

6. Asia Pacific Trade Agreement (APTA): 1975 # BANGLADESH # CHINA # INDIA # LAOS # MONGOLIA # SOUTH KOREA # SRI LANKA

7. European Free Trade Association, Andean Community, Central European FTA, etc.

IV. Common Market

A Common Market is an advanced form of economic integration where member nations not only enjoy free trade of goods and services but also implement common external tariffs and product regulations. This arrangement facilitates the free movement of factors of production, such as labor and capital, among member countries. By increasing competition and specialization, a common market leads to a more efficient allocation of resources, enhancing overall economic productivity. However, it can also result in concerns about the erosion of national identities, as seen in the context of Brexit, where the UK’s departure from the European Union was partly driven by fears of losing sovereignty and cultural identity in the face of deeper integration 

Examples:

1. ASEAN Economic Community, MERCOSUR, Central American Common Market, European Single Market, Eurasian Economic Space.

2. European Single Market agreement between the EU and (with certain limitations) Iceland, Lichtenstein, Norway and Switzerland guarantees the free movement of goods, capital, services and labor.

V. Monetary Union

A Monetary Union is an agreement among member countries to adopt a shared currency, which may not necessarily entail complete economic integration. This arrangement can take various forms, including formal unions with common policies or informal agreements without strict regulations. By using a single currency, a monetary union eliminates foreign exchange risks and conversion costs, making trade and investment easier among member nations. Additionally, it facilitates price comparison and enhances transparency, contributing to crisis resistance by allowing for a more coordinated monetary policy. The most notable example of a monetary union is the Eurozone, where multiple European nations share the euro as their currency​.

Example:

1. EURO used by Belgium, Cyprus, Ireland, Italy, Germany, France, Malta, Portugal, Spain, etc.

2. Indian Rupee used by India, Nepal and Bhutan. Even Maldives, Zimbabwe and Qatar to some extent.

3. US Dollar used by USA, Samoa, Puerto Rico, Ecuador, Virgin Islands, etc.

4. CFA Franc used by Benin, Togo, Chad, Republic of Congo, Gabon, Central African Republic, etc.

VI. Fiscal Union

A Fiscal Union is an agreement between member states to coordinate their fiscal policies, which includes taxation and government spending. This type of union allows countries to share financial resources and manage public finances collectively, promoting economic stability and growth across the member nations. In a fiscal union, there is often a central authority that oversees fiscal policies, ensuring compliance and cohesion among member states. Some of the features of a fiscal union typically include a common budgetary framework, coordinated tax policies and mechanisms for financial transfers among member countries to support economic stability, particularly in times of economic distress. By pooling financial resources, a fiscal union can help mitigate economic disparities and foster solidarity among member states. 

VII. Customs Union:

A Customs Union is a type of trade bloc that combines a free trade area with a common external tariff applied to non-member countries. This arrangement is formed by countries that agree to adopt a unified external trade policy, which enhances trade by eliminating tariffs among themselves while imposing the same tariffs on goods imported from outside the union. Customs unions not only promote economic efficiency through increased trade and specialization but also foster closer political and cultural ties between the member nations. These unions are typically established through trade agreements or pacts, enabling member countries to negotiate as a single entity on trade matters. 

Example: 

Andean Community, Carribean Community, East African Community, GCC, Israel-Palestine Authority (Al-Shabaka), etc.

VIII. Customs and Monetary Union

A Customs and Monetary Union is an advanced form of economic integration that combines the features of both a customs union and a monetary union. In this arrangement, participating nations not only establish a common foreign trade policy and eliminate tariffs among themselves but also adopt a shared currency. This integration facilitates trade by simplifying transactions and eliminating exchange rate risks among member states, thereby promoting economic stability and growth. 

Example: European Union, Switzerland - Liechtenstein, Economic and Monetary Union of Central Africa, West African Economic and Monetary Union.

IX. Economic Union

An Economic Union is an advanced form of regional integration that encompasses both a common market and a customs union. In this arrangement, member nations not only engage in tariff-free trade and share a common external tariff but also implement unified policies regarding product regulations, the movement of goods, services, and all factors of production. Furthermore, an economic union establishes a common foreign trade policy among its members. The primary objective of creating an economic union is to enhance economic efficiency, promote competitive markets, and strengthen political relationships between member countries. 

Example: CARICOM, GCC, European Union.

X. Economic and Monetary Union

An Economic and Monetary Union is an integrated arrangement that combines aspects of both economic and monetary unions. Member nations typically share a partially unified trade policy, allowing for the free movement of goods, services, and factors of production with minimal barriers. This integration facilitates enhanced economic cooperation and competitiveness among member states. Additionally, a key feature of an EMU is the adoption of a common currency, which helps eliminate exchange rate fluctuations and fosters greater economic stability. 

Example: Euro Area (countries that have adopted EURO as their national currency), Eastern CARICOM and Switzerland - Liechtenstein.

XI. Complete Economic Union

A Complete Economic Union represents the highest level of economic integration among member states, characterized by the harmonization of trade, fiscal, and monetary policies across the entire union. In this arrangement, while each state maintains its own independent government, key decisions regarding monetary policy, domestic and international trade regulations, agriculture, external affairs, and welfare are centralized under a federal government. This structure enables a cohesive economic strategy that aims to maximize efficiency, enhance competitiveness, and ensure balanced economic growth across the union. 

Example: USA

Impact of Economic Integration

Economic Integration is an outcome based action. When nations unite, there are winners as well as losers. There are gains as well as losses. There are free flow as well as blockage of goods, services and other factors of production among nations. Likewise, each of these element has a repercussion on various global scenarios and tend to create a change. Here, we will understand the positive and negative impact of Economic Integration from a global perspective.

Positive Impact

1. Boosts Trade: Economic groupings can boost trade between nations as tariff and non-tariff factors tend to bow down. This creates wide opportunities for filling the gap. Exporters get a chance to explore nearby markets whereas imports get a chance to crack economical deals. This is more like generating a comparative cost advantage where trade trade creation takes place. Eg. Between 1993 to 2019, grade between member nations of NAFTA has quadrupled from $290 Billion to %1.23 Trillion and also boosted economic development, gains and lots of job opportunities. 

2. Greater Consensus: A trade bloc can have a good number of nations involved with a common objective. This can create a high level of economic union and thereby let countries to follow common standards. Eg. European Union consist of 27 nations including Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. Another example can be CARICOM which comprises of Antigua, Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat (a British overseas territory in the Leeward Islands), Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, and Trinidad and Tobago.

3. Political Cooperation: Trade blocs develop close relation between governments of member nations. This stands to be a strategic move as deeper political connections can lead to free flow of factors of production, better administration and diplomatic arrangements. For example, India holds close political relations with strategic partner nations like Russia, Israel, Afghanistan, France, Bhutan, Bangladesh and United States of America. Russia, Israel and France being India's biggest supplier of defense and military equipment. 

4. Low Cost: Greater economic tie ups can lead to reduction in tariff barriers thereby elimination the problem of high cost imports. This becomes highly strategic as importers would be more attracted to buy so as to benefit from the pact. Low cost of commodities such as oil and food items lead to a greater demand, thereby widening markets. Example, NAFTA led to reduced import prices which controlled inflation in the USA. NAFTA reduced USA's dependence on Middle East and Venezuela for oil post banning import of oil from Iran. 

5. Emerging Employment Opportunities: Trade blocs lead to higher economies of scale and that is possible only when maximum factors or production are put into use. Increase in trade offers direct as well as indirect jobs to people and firms across various industries. This involves labors (mainly for manufacturing of goods), operations, shipping, logistics, transportation, technology and marketing, packaging and inspection, quality assessment firms, diplomats, clearing and forwarding agents, tax consultants, banking, insurance, networking and even energy. Statistics say NAFTA created near about 5 Million Jobs in the USA. 

6. Technological Development: Economic integration can lead to adoption and improvement in technology. Growing firms choose technology as a essential mean for acquiring trade contracts. With improved technology, there can be greater focus on delivery.

7. Investment: Economic integrations may ease flow of funds and business strategy within member nations if agreed upon. Countries with economic partnership enable smooth flow of investment into various industries thereby enabling global investors to explore foreign markets. Example, India has received maximum FDI equity flow from Singapore worth $14.67 Billion, followed by Mauritius worth $ 8.24 Billion and USA worth $4.22 Billion during the FY 2019-20. Similarly, the Bilateral Trade Agreement between the USA and Netherlands has got investments in Netherlands over $880 Billion in 2018-19.

8. Competition: Formation of trade bloc increases global competency. Firms head face to face accepting challenges to deliver maximum with optimum utilization of technology. This leads to price stabilization, quality improvisation, massive availability of products and bridging of demand - supply gap.

9. Economic Development: Trade blocs cater economic development among member nations as price gets reduced and greater demand and supply is expected. This can lead to large scale production and hence, increase GDP and economic development.

10. Currency Stabilization: Common currency used by a number of nations in a particular region keeps its value stable when it comes to exchange and fluctuation. Due to its acceptance by multiple nations, there is a higher demand and supply of that currency which keeps the value highly stable. 

11. Social and Cultural Relations: Trade blocs bring nations together on socio-cultural grounds that creates a better understanding. This gets countries close through sharing social programmes which can build peace and prosperity in the nations. 

12. Reduces Administrative Procedures and Costs: Common regulations lead to less monitoring and control on the flow of goods, services, labor and capital and thereby eliminates additional cost for it's controlling. 

13. Others: Increased Efficiency, Proper Utilization of Resources, Infrastructure Availability and Improved Standard of Living. 

Negative Impact

1. Diversion of Trade: Due to Regional Integrations, a lot of opportunity with respect to low cost acquisitions can be lost. Trade is diverted from low cost producing nations outside the integrated region to high cost producing nations within the region. This may also affect quality.

2. Loss of Revenue: Forming Trade Groups block the member nations from earning their usual tariffs. This is because goods are imported from members nations at low or no barriers. This restricts the government from earning maximum possible revenue. 

3. Production Wastage: A lot of LDCs may be involved in massive manufacturing of common items which may lead to increase in supply but stagnant demand, thereby causing difficulty to trade.

4. Regulations: Certain Economic Groupings require their member nations to pass through a list of eligibility criteria so as to obtain membership in the union. Example, for obtaining membership in European Union, a nation has to satisfy “Copenhagen Criteria” popularly known as conditions for membership. 

5. Affects National Sovereignty: Adoption of common external barriers, common currency and fiscal policy can affect the decision making process and maintenance of supreme order in a nation. 

6. Excess Utilization of Resources: Trade Blocs may indulge in massive production and hence end up exploiting huge quantum of resources for trade purpose. This can lead to over supply, wastage and non-utilization of such resources.

Overseas Market Research

Market research is a process of identifying the most appropriate market along with measuring its size and characteristics. Market research is highly required while exploring new markets so as to understand consumer behavior, trend, culture, history, technology, climate, language, politics, barriers, market accessibility, competitors with demand and supply gap. Let's understand why market research is an essential tool in international business. 

1. Identification of customer needs and wants: Market research enables an exporter to know and understand what customers need in overseas market. No exporter can directly sell his products in any foreign market. There need to be a thorough research-based affirmation whether demand can be created in the foreign market or not. The exporter with the help of his mark research agency try to collect information about goods which are highly purchased by consumers in the targeted market and thinks of bringing in variation and innovation. Certain brands which are already popular should also conduct market research before entering new markets so as to understand consumer psychology related to buying and other influencing factors such price, income, competition, brand loyalty, impact of advertising, awareness, etc.

2. Product Decisions: With good research, a potential exporter can think and decide about the best kind f product to be sold in the targeted market. A good example here can Volkswagen cars manufactured in Germany to be exported in India can be successful only they incorporate right side steering. For this, Volkswagen need to know Indian road and driving compliance which is possible only through research. 

3. SWOT Analysis: Analysis of Strengths, Weaknesses, Opportunities and Threats requires internal as well as external research. An exporter primarily need to know what he has and what he can do. This will enable him to understand his strengths and weaknesses. Points like quality certification, massive production, global recognition, optimum pricing can stand as key strengths whereas inadequate marketing team, poor research and development, lack of creativity and innovation can stand as a weakness. Similarly at an external level, a organization need to identify opportunities like deals, orders, increasing demand, trade agreements, economic unions along with threats like political issues, civil wars, rival competition, pandemic situation, global crisis, etc.  

4. Gain Competitive Advantage: Competitive advantage is an advantage that a firm gains over its competitors, allowing it to generate higher sales and retain more customers than its competitors. Market / Product research enables a marketer to excel in those areas which command high demand in market. With research, they can develop advanced products and services thereby gaining competitive advantage. Eg. Nokia attained competitive advantage over then existing brands such as Motorola, LG and Samsung with respect to scale, brand and services. Nokia created amazing product designs outperforming its rivals. Nokia was the one who brought advanced technology in developing nations by its launch of N series.

5. Global Market Intelligence: Conducting research enables a firm to gain high level knowledge about the targeted market. This includes various areas like emerging trends, fashion, competition and even gaining agency and consignee information through which selling units can be established.

6. Consumer Demographics: Understanding consumer demography is a key essential for any potential exporter. It's very important to know population distribution based on gender, age, psychology, habits, status, etc. Based on these points, an exporter can come to know the kind of consumers existing in the market.

7. Measure the effectiveness of Distribution Channels: Researching and gaining information on distribution channel is another responsibility of a potential exporter. An exporter should know the most appropriate channel to deliver his goods in the targeted market. Eg. Apple sells a part of its products in Apple Store creating a unique touch and experience with the consumers and it also depends on indirect / third-party channels like Croma, Reliance Digital, etc. enabling Apple to get a higher reach in the markets. 

8. Effectiveness of Promotional Measures: Research enables a potential exporter to measure the effectiveness of promotional measures to be taken by them. Eg. Mondelez's Cadbury India, through it's consumer research understood that Indians prefer unique gifting options to touch the heart of the receiver. Hence, Cadbury has marketed its products with an emotional appeal tied to gifting during festival occasions. This research output was also the reason why Cadbury launched sale of Toblerone in India in 2012 all because of its unique shape and gifting ability.

9. Develop Packaging: Research also enables an exporter to create better package model, handle and design as per consumer preference. Eg. Dairy products sold by Al Rawabi in India are packed in a reusable plastic tub and bottles so as to ensure safety, durability and comfort handling. 

10. Others: Research also helps a firm to understand trends in the industry, forecast sales, make price related decisions and also generating effective feedback for analysis. 

• Pepsi Co: Pepsi Co India projected the the liking for nachos in India and hence launched Doritos with Indian flavors through a Make in India campaign.

• Royal Enfield: A 500 CC Royal Enfield bike may be priced around $3000 whereas the same in USA or Cambodia or Vietnam or UK may be priced above $5000. Since Royal Enfield bikes are manufactured mainly in India, the increase in price may be for transportation, quality standards, shipment and duties. 

• Harley Davidson: Similarly a US made Harley Davidson Street bike is priced at around $8000 in USA whereas $6500 in India. This can be due to Harley Davidson's manufacturing unit located in India (Bawal, Haryana). PS: HD has decided to discontinue it's sale and manufacturing operations in India due to lack of demand leading to closure of Bawal plant in Haryana. 

• Apple Inc: This company has “Apple Customer Pulse” research group in charge of conducting online surveys enabling them to compile and analyze the data faster with proper administration. This has lead to effective and appealing research programmes with active participants. These survey outcomes have made the company to apply different designs and modifications for their products. Something like having bigger screens to view videos and games more clearly or having a high-end camera to click the quality images in the night without noise or even water resistance. 

• McDonalds: One of the largest fast-food chains in the world has done extensive research to fit in the trend. Focusing on questions like most demanded product, price factor, marketing methods and geographical location for good business. With such research operations, McDonalds have improved their standards and have also pumped in variety of products geographically. 

Determinants of Foreign Market Selection

In reality, there are loads of factors influencing an exporter for selecting the most appropriate market. The exporter cannot simply select any market and dump goods. Every consignment has to be backed by strong analytics so that there is clarity in work. There may be millions of barriers that could hamper the sale of goods in a particular market which can be mitigated, if the exporter has a vigilant and smart team with the best distribution and supply chain management. Let's understand some of the factors playing an important role selecting markets by a potential exporter. We will also look into some real life cases to get better view. 

1. Market Size: Size of a market calls a potential exporter for business. Bigger the market size, more can be the demand and hence, proves a good market place for a potential exporter. For example, India has been a big market where not everything is available. When a new non existing commodity is brought in Indian market, it gets a higher reach in the market due to a huge supply chain and distributorship. In 1983, India's first affordable car, Maruti 800, with 796 cc engine and hatch back was launched through a Joint Venture agreement between Government of India and Suzuki Motor Corporation, Japan. As of 2018, Maruti Suzuki India Limited had a market share of 53% in passenger car market. 

2. Market Growth & Development: An exporter should analyze and estimate whether his product can grow and develop in the targeted market. This happens only after the stage of survival. Many internal and external factors play a role here. A good example can be how Apple entered Indian markets in 2007, survived, grew, expanded, developed and raised it's market share to 75.6% in India's premium smartphone market. 

3. Government Regulations: Every nation has it's set regulations with respect to foreign trade which has to be noticed and followed by a potential exporter while selecting the most appropriate market. Regulations can be related to imposition of quota, sanctions, rules of origin, tariff, additional tariffs, MFN norms, etc. In case of an opportunity, the exporter can grab. But in case of a threat, the exporter may try developing intense marketing and supply chain strategy or try hitting some other market.   

4. Level of Competition: Existence of competition also influence a potential exporter for selecting a market or even a strategy. In case of stiff competition, the potential exporter should apply tactics to gain competitive advantage. Whereas, in case of no competition, the exporters can eat up majority of the market with his product.

5. Physical Infrastructure: Physical infrastructure includes things like accessible roads, waterway services, docking services, transportation services, warehouse and distribution services, exhibit outlets and centers where products can be marketed. Availability of these resources enables a trader to decide about choosing market. Eg. Dubai being a small country has highly developed infrastructure which enables traders to create a strong distribution network and penetrate quality products in to market. 

6. Political, Economical and Operational Risk: Risk factors should always be analyzed before selecting export market. There can be political risks arising due to governmental conflicts eg. North Korea and South Korea, USA and Iran, India and Pakistan, USA and Venezuela, etc. along with economic risk like economic condition of a nation affecting a company or an industry domestically or abroad or credit risk, exchange rate risk and sovereign risk. Eg. Zimbabwe (foreign exchange), Venezuela (oil industry), Greece (debt crisis), etc. Such risks should be mitigated.

7. Adequate Logistics Services: Logistical services include customer order processing, order management, preparing MIS, databases, arrangement for transportation, storage and distribution warehouse and even delivery team so that consignment can reach the target buyer in the right form, in the right time, in the right manner. Availability of quality logistics services can be a factor motivating an exporter to enter a particular market. 

8. Trade Regulations: Simple and lenient trade relation between nations also influence potential exporters to select market. A good example can be of American traders successfully trading with Canada and Mexico because of the Free Trade Agreement and members of the European Union. 

9. Other Points: Factors such as favorable consumer behavior, lower cost of marketing and distribution, preferential treatment through trade blocs, availability of human resource as per international needs, imposition of sanctions, wars and boycotts influence exports in making decisions related to selecting markets.

Understanding Trade Blocs

1. EUROPEAN UNION

2. BRICS

3. CARICOM

4. ASEAN

5. Trans Pacific Partnership

6. MERCOSUR

7. WTO Agreements

Hope you had a good read and understood how nations unite with specific trade objectives creating unions and even barriers. Hope you understood the importance of research in business and gained a good idea about how to select market for trade. There are many more facts to observe and would recommend you go through the following sites for a better understanding about world markets. These are super links having global trade data which gives information about trade agreements, sanctions, rules of origin, MFN duties, quotas, trade promotion and even trade restriction. Do click and learn by simply exploring. 

1. https://www.trademap.org/

2. https://www.indiantradeportal.in/

In the above website, you can explore and understand potential trade sectors and markets. There are various tools available for drawing analysis about identifying the most appropriate market for infusing your goods. Above all this, developing a smart network globally and make them work for you as per your needs is also required by an exporter.