Emerging Markets are Key to Long-Term Growth

How is New York State doing in today's global economy? Three important questions can provide the answer: 1) How much are we exporting? 2) Where are we exporting to? and 3) Do our exports show an upward trend?

How much are we exporting?

The answer is fairly easy and quite encouraging. According to data published by the U.S. Census Bureau, New York State exported $58.7 billion worth of goods and services in 2009. Leaving out the recession year of 2009, New York State's total exports increased from $51.8 billion in 2005 to $81.3 billion in 2008, an increase of 57%.

Where are we exporting to?

The top five destinations for New York State's exports are Canada, the U.K, Israel, Switzerland and Hong Kong, all of which are mature markets. Excluding Hong Kong and Israel, these markets are not very different from the U.S. market. They offer a predictable business environment, but the potential for rapid and long-term growth is slim. For that, businesses must look toward emerging markets growing at rates of 6%, 7% or 8% per year. Brazil is one such market that IMF forecasts will close the year with a 7.5% growth in GDP and is expected to sustain a growth rate of over five percent for the next five years. Brazil's imports grew by 135% over the period from 2005 to 2008, during which New York State's share of Brazilian imports declined from 0.61% in 2005 to 0.38% in 2008. India, another high growth emerging market imported 124% more in 2008 than it did in 2005 while the share of New York State in Indian imports decreased from 0.74% to 0.57% over the same period. From this data, it appears that the answer to "where are we exporting to" is that we have increased our share in the markets that have increased their imports only modestly, while our share in the emerging markets, which have increased their imports dramatically, has decreased.

Do our exports show an upward trend?

Yes, but we can have an even steeper growth trajectory if we pay special attention to the emerging economies. While mature markets are important, real opportunities for growth are in the markets where demand is only expected to grow for goods that New York State, and specifically Western New York produces. As these emerging markets grow, they remain dependent on imports for their capital goods and high-tech equipment needs, and as their industrial base expands they are expected to buy more of these goods from manufacturers such as those located in Western New York. It is vital for the economic vitality of Western New York that our manufacturers get into markets like Brazil and India and consolidate their positions to claim their stake in these expanding economies. An important factor to consider when doing business in emerging markets is a well thought out market entry strategy and commitment of resources. Each market and each industry vertical has its own dynamics that need to be carefully examined before choosing the appropriate distribution channel and sales strategy.

Insyte Consulting partners with WTCBN to help clients grow beyond their domestic market. Contact Insyte at 716.636.3626 for more information.