International trade negotiations might seem hard to understand, but when new agreements between nations are signed, it can have a direct impact on your business.
Dr Elms, Founder and Executive Director of the Asian Trade Centre (ATC) is a highly regarded expert in international trade policy and negotiations. The ATC is the body that works with governments and companies to design better trade policies for Asia.
I spoke with Dr Elms to understand more about trade agreements and how they impact small businesses.
Why are trade agreements important for small business?
Trade Agreements help set the platform on which small businesses can trade. They do a couple of things:
- They help constrain what governments can do, which is useful for small businesses because it means that the rules around international trade can’t change arbitrarily or quickly.
- You can use them directly. There are benefits in a trade agreement for businesses big and small. So it is important to understand what rules have been agreed to that affect your business as you start to trade globally.
As an example, if you make a small physical good, let’s use the example of a water bottle, you can use trade agreements to get your products into somebody else’s market at a cheaper price. And sometimes, you can do that more cheaply than your competitor from the next country over. For a small business owner this is super important because you are already competing with the very large water bottle manufacturers. You need any advantage that you can get.
Trade agreements do two things – They help governments be consistent, and they help you as the small business owner get an advantage over your competitors in other markets. This is why they are important to small businesses.
Your company works across the Asian region with many trade-related bodies to advocate for better trade policy for small business. How has collaboration helped achieve that?
We have used collaboration to help our business appear much larger than we actually are. To the outside, it may look like our company is quite a large company, but we are actually a small business. We are much smaller than people assume because we have managed to successfully leverage other people’s influence and other people’s help to make us bigger than we would otherwise be. This is crucial for our business.
In terms of whether others in our industry are as collaborative – it really depends. Some parties are extremely helpful, while others are very jealous and protective of their space and therefore very reluctant to collaborate. They do not see collaboration as a win-win outcome. For example, there is an organisation that is similar to ours that is working towards the same objectives. It seems like it should be a natural fit for us to collaborate to enable us to reach our desired outcomes faster and more effectively. But they have chosen to compete and not to collaborate. It’s extremely frustrating as it slows things down in our industry.
As a small company, I believe that you have to be able to network, you have to be able to work with others and collaborate.
What collaboration are you most proud of?
We have a number of them. However, one I would like to highlight is a major SME summit we organised for our members last year. That was very exciting because it brought together hundreds of small businesses from over 7 countries. We worked together with our large companies to help support our small companies. We brought in Government officials. It was collaboration on steroids! It was a collaboration that saw many businesses and organisations come together to figure out how to create a better business environment for us all. The energy and the enthusiasm of the participants was the most exciting thing about this event and we will be doing it again next year.
You worked with many multinationals on your event. Can you share some tips about how a small business can communicate and collaborate with a big corporation?
Sometimes it can be difficult. A lot of the people you deal with in a multinational company have never had any exposure to a small business, and they do not really understand how we operate or what we do day-to-day. They will say things like, “just get your legal team to review the documents,” or “get your HR department to send that to us”. And I’m like, “I am the legal the department, I am HR. I am all of those things!” So that is a bit of a challenge.
When approaching larger companies, you have to do your homework and prepared. Here are some tips about working with them:
- Be very clear about what it is you are delivering.
- Be clear about what you want to get out of the partnership.
- Explain to them why it is in their best interests to work with you.
- Have a presentation which shows all of the above, as it is likely to be passed up the decision-making ladder.
- The most important and hardest part is to find the right person in the organisation to deal with.
To finish, I want to share this great perspective from Dr Elms on how to establish trust when collaborating with companies far bigger than you:
The Asian Trade Centre website provides details of international trade agreements that have just been finalised, or are in the process of negotiation. Visit http://www.asiantradecentre.org to find out if these agreements will help your small business save money or reach new international markets in a more advantageous way.
If you are a small business in ASEAN and Asia-Pacific interested in cross-border trade, claim your free membership of the Asia-Pacific MSME Trade Coalition (AMTC) as a member of bizzi.