How Internet Impacts Intl Trade

An Expert's View about Electronic Commerce in the United States

Posted on: 17 Nov 2010

International trade: The Internet revolution!

 

 

 

Understanding the advantages of globalization requires taking a fresh look at the new architecture of international trade. The growing involvement of micro entrepreneurs in trade, the ease of accessing comprehensive information, as well as the emergence of online marketplaces have profoundly disrupted international trade’s traditional mechanics. Market expertise is no longer the preserve of either a community of traders inside large companies or brokers and specialized firms, but is now accessible to all, via databases, social networks and search engines. These developments are strategically important: both for companies and for the competitive strength of nations.  By enabling everyone to do business globally, thousands of new players have entered the arena of globalization. They succeed by using their creativity, innovation and foresight; they overcome many obstacles that formerly made the practice of international trade the domain of larger entities. Bit by bit they are shaping the future path of economic development, the main areas of tomorrow’s growth and employment.

 

The growing involvement of micro entrepreneurs in trade is undoubtedly the most spectacular first achievement of the internet. Individuals now have the possibility to become, with a few clicks, an importer or an exporter. The fact that today this seems to us a matter of course makes it no less revolutionary: with an almost disturbing facility, everyone can now build his web presence using WorldPress publication tools, multiply his visibility on Twitter, organize a marketing campaign with GoogleAdds or be paid through Paypal: and all of that for very little money. These tools, which potentially transform any Internet user into a global entrepreneur, have already produced three direct results:  they provide immense opportunities to all who show initiative and creativity, they destabilize traditional economic models by allowing for the emergence of pure internet players in every domain and they accelerate globalization by abolishing borders and regulatory restrictions.

 

The second phenomenon has to do with access to knowledge. By allowing all economic actors to access, in real time, the same information, immediate response becomes a key element of competitiveness. All traditional knowledge sources are shaken up. Barriers which until recently had been impossible to cross, such as the complexity of regulations, can no longer easily stand up against the new technology. Specialized platforms automatically calculate customs duties, offer the possibility to download forms and synchronize all trade operations with logistical and banking intermediaries. By facilitating market research and transactions to such a high degree, information systems profoundly demystify international trade. Short economic cycles and the pace of changing consumer trends also foster the role information plays in the R & D processes. Innovation is now shared by a sometimes widely dispersed group, and is part and parcel of the collaborative culture of the Internet. The projects of some and the knowledge of others meet on forums or websites dedicated to constantly launching new commercial offers. The ability to quickly mobilize intelligence and ideas becomes one of the most important criteria of performance.

 

The third phenomenon concerns the location of markets.  For the same reasons major cities and ports became meeting-places for buyers and sellers, the emerging virtual spaces - such as the Chinese Alibaba.com – are already bringing together millions of companies. Thanks to the technology, these spaces are able to act upon the three levels key to the recognition of a marketplace: concentration of actors, product visibility and a sense of trust between buyers and sellers. With the power of Search Engine Optimization (SEO) tools, quality images and the power of linking and rating systems, online marketplaces can effectively respond to the needs of businesses; if in addition we consider the elimination of intermediaries and the low costs of prospecting which these websites generate, we can see that their attractiveness and strategic value put them at the heart of the economic development process.

 

All these phenomena are in flux and we are still unable to fully imagine the impact they will have on the architecture of the economy in the years to come. This is mainly because the three established principles of world trade are called into question: price as the main factor of competitiveness, size as a prerequisite for export and proximity as a crucial step of business development. The dominance of the price factor will be largely displaced by creativity, which will progressively extend to all domains of the economy, of production and consumption. Since anticipation and innovation will no longer only be a question of means, the size of a business will only be acceptable if it remains compatible with the results that it is able to achieve in its sector. The risk of inaction will diminish performance of large entities. Finally, the correlation between a territory and a product will grow increasingly weaker; trade will gradually be organized within virtual territories.

 

The stakes of this are monumental and will generate the revitalization of our economies. Companies must progressively adopt the new criteria of competitiveness and think of the new advantages brought about by mobile Internet and by the standardization of methods of consumption. This new phase of globalization offers new horizons for people all over the world to quickly understand trends, express their creativity and be open to the world.

 


Posted: 17 November 2010

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