The Sunday Mail
THE African proverb “A child shall learn wisdom and get understanding if he sits beside the elders” captures the impact of close interactions between elders and young people, especially with regard to the transfer of knowledge and skills.
Trade Focus
Allan Majuru
While it was probably coined before modern industry, it instructively emphasises the importance of linkages between established and emerging businesses.
A lot has been done by President Mnangagwa’s administration and related institutions such as ZimTrade — the national trade development and promotion organisation — to develop the capacities of local exporters and strengthen the competitiveness of Zimbabwean products.
However, there is also need for strong linkages between established and emerging exporters.
Presence in export markets must be based on co-opetition (where competitors co-operate to achieve a common goal and get ahead of the market), rather than competition.
For example, ZimTrade facilitated the participation of local companies at the Zambia Agricultural and Commercial Show, which is the largest exhibition in that country.
First-time participants, who were largely small businesses, were able to ride on the experience of established exporters in their engagements with potential buyers.
These linkages resulted in potential exporters clinching lucrative deals with leading distributors in Zambia.
This is one of the many examples where linkages between established and potential exporters have resulted in tangible results for the local industry.
But ZimTrade intends to ensure continued engagements beyond trade promotion events.
The current global economic uncertainties make it increasingly important for businesses to have a diversified portfolio of customers.
For established exporters, the process may seem simple. However, for potential and new exporters, it can feel daunting.
Therefore, many would-be exporters often give up too early in the process.
Synergies between established and potential exporters can create a powerful force for growth.
Established exporters are those companies that have been exporting their products or services for some time and have already established relationships with foreign buyers and distributors.
They also have a solid understanding of the rules and regulations of international trade.
On the other hand, potential exporters are businesses that have not yet entered the international market and may be hesitant to take the plunge due to lack of knowledge, experience or resources.
So, synergies can help improve production efficiency, reduce production costs and enable negotiated freight costs owing to larger volumes.
By working together, established and potential exporters can also expand markets, increase profits and create new jobs.
Ways of collaborating
There are various ways in which the two can work together.
The most common is through building volumes for exports.
The quantities required in most markets may usually exceed the ability of a single company to satisfy.
For example, the current demand for certain fruits and vegetables in Europe cannot be satisfied by one country, let alone one company.
The high quality of local produce has stimulated demand for Zimbabwean peas in Europe.
To meet the demand, ZimTrade has added to the base of suppliers by clustering established exporters with potential ones to produce mangetout and sugar snap peas in Midlands province.
The Midlands peas cluster has already begun supplying buyers in international markets.
The model has seen established exporters depending on emerging exporters to boost quantities.
So, established exporters can look to smaller players as a source of additional volumes, rather than as competitors.
This allows them to scale up faster in new markets and have an edge over competitors who are trying to break into the same market.
Customers may be more likely to trust a company they recognise from previous purchases than one they have never heard of before.
The emerging exporters in the peas cluster similarly lean on the expertise, certifications and networks developed by established exporters.
Horticultural exports — particularly to Europe — require certifications and adherence to certain standards, such as the Global Good Agricultural Practices (GLOBAL GAP), Sedex Members Ethical Trade Audit (SMETA) or Fair standards, which assure buyers that the produce was grown according to acceptable ethical and environmentally friendly practices.
The financial and time resource investment required in acquiring these certifications is beyond the reach of many smaller potential exporters, who then stand to benefit from established players.
Further, collaborations between established and potential exporters can also create platforms for the development of infrastructure that aids export trade and benefits communities.
An example is the establishment of one of the largest packing facilities for smallholder export growers in the country by private sector players through Technoserve.
The facility will open soon near Chachacha Growth Point and will uplift the livelihoods of farmers who, otherwise, would not have access or capacity to export.
Collaborations between potential and existing exporters can also be through knowledge and skills transfer.
Established exporters tend to have more experience in different techniques and production processes, while potential ones can bring new methods and ideas. In addition, new exporters are more adaptable to dynamic trends than the more established companies.
Potential exporters can provide complementary production processes that, otherwise, would require additional investment by the established exporter.
It is also worth noting that potential exporters can help established ones to stay relevant by bringing new products or services that cater for changing consumer preferences or emerging trends.
As established exporters share their knowledge and expertise with potential ones, new ideas can be generated, with new products and services being made available. Export growth in any industry is crucial for economic expansion.
By working together, the parties stand a better chance of succeeding in international trade.
Collaborating effectively with each other’s strengths while bridging gaps in areas where there may be weaknesses presents opportunities not only within themselves but also across entire industries around the world. Established exporters can also help potential ones finance their exports by guaranteeing revenues from export sales, where potential exporters feed into as third-party suppliers.
Alternatively, they can provide loans or even help potential exporters secure financing from other sources.
Allan Majuru is ZimTrade’s CEO.
