MARKETS DRYING UP? YES, IT WAS EXPECTED!! Posted by Ashok Edurkar on 31 Oct, 2008 | Total Comments: (1) |
POSTED BY 
Ashok EdurkarConsultant at Stork Handelsges m.b.H., Austria |
MARKETS DRYING UP? YES, IT WAS EXPECTED!! Posted by Ashok Edurkar on 31 Oct, 2008 | Total Comments: (1) |
POSTED BY
Ashok EdurkarConsultant at Stork Handelsges m.b.H., Austria |
What else can happen if US$ TOUCHES TO inr 49.5 level making exports too costly for importing countries?
Several job-oriented export sectors showing alarmingly negative growth because importing countries are shifting to more competitive economies like Thailand, North Korea, Vietnam etc.The global meltdown has apparently hit exports hard, with more than a dozen job-oriented export sectors showing up to 70 per cent negative growth in September, compared to the same period of 2007-08. Liquidity problem is acute. Banks are avoiding inland & overseas bills discounting by charging high interest rate nearly 15 to 18% that too case to case basis on past records.
The decline is mainly due to importing country’s expectation of adjusting export price related to proportionate rise in value of US$ to INR value. Naturally exporters are reluctant to offer such price discounts to their overseas client. Some overseas clients are using one or the other way to postpone negotiation of exports document in the hope that one or the other day Dollar rate will be in their favor. Indian commodity/services exports has become at least 15% costly in US$ terms as compared to figure that was prevailing few months back. Even smaller gulf countries are posing now serious challenge to Indian exporters that too in software field wherein India had always upper hand in the international market.Some of the sharpest declines in exports have been in tea (-20 per cent), handicrafts (-70 per cent), carpets (-32 per cent), oil meals (-50 per cent), man-made yarn (-17 per cent), cotton yarn (-19 per cent) and marine products (-19 per cent).
Alarmed by these figures, the Commerce Ministry is likely to recommend lifting of export curbs on items like steel and agro-products. This was hinted at a high-level meeting convened by the Commerce Secretary, Mr G. K. Pillai, recently, when it was stressed that the government needed to "re-look" at all the export restrictions. With several sectors putting up a dismal show, the overall export growth in September plunged to a little over 10 per cent from 26.9 per cent in August. Exports for the April-August period had shown a growth of 35.1 per cent."The global financial crisis is significantly impacting exports and the impact could be more in the coming days," said an official involved in the stock-taking exercise.
The US and the 27-nation European Union bloc, two of the largest markets, are in the midst of the worst economic crisis since the Great Depression of the 1930s.
The volume of decline in the international trade is also reflected in the crash in the shipping rates. Rates for bulk cargo have dropped by nearly 50 per cent.Although the export performance figures for September are yet to be officially released, the distressing performance is emerging in the face of a depreciating rupee that is supposed to mean better realizations for exporters! This is a short term gain for which true international marketer should not become happy as he is more interested in repeat orders & advanced customer relationship management.This drastic situation can be controlled by a proactive innovative marketing action based on basic marketing pricing approaches like “Cost plus & Market Minus”. Indian exporter should make a blend of these two fundamental pricing approaches & also incorporate INR to US$ relationship right in the export agreement at the signing stage so that both exporter from India & importer from importing countries are in “win-win” situation. In such cases exporter losses short term benefits for any appreciation of rupee but in the long run cost of exported commodity remains unchanged in view of repeat orders. More repeat orders means more explosion of business with more growth.But all this needs long term vision wherein Thailand , Korea ,Vietanam are more smarter than Indaian International player..
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