Exporters need to focus on value-added products

As a gloomy market situation prevails, exporters are feeling the heat battling for ever-shrinking profit margins. And it holds true for almost all sectors.

Inflation is at a 14-year high and the steadily increasing input costs are now giving all manufacturers and exporters nightmares. The industry is caught between the deep sea and the devil...they are left with very little options not to increase the prices of their products, but have to also live in fear that if they do so, they stand to lose buyers to low-cost countries.

Even in the domestic market one can see a drop in demand for autos, homes, offices, and a whole lot of other goods and services. Since borrowing has become expensive, it is bound to impact demand, especially of goods and services.

Now the question is: what can the manufacturer/ exporter do to counter this slump in demand? The domestic companies need to wake up to the challenge. Their stress should be now on value, rather than volume. They need to tell the buyers that if they want value-added products, they need to pay more for them.

There is a vast pool of untapped reform potential that the manufacturer/ exporter can tap to raise long-term profits. There is much room to raise productivity growth; the production line must be streamlined to derive maximum benefits from minimum input.

The industry also has great supply side challenges which need immediate attention. A huge amount is lost in the supply chain, which can be lessened by the companies. Above that both manufacturers and exporters need to concentrate on products that are in demand. 'Give what the buyer wants' should be the mantra in these trying times.

Monthly Economic & Commercial Report on Kazakhstan for March 2008 giving latest updates on developments directly affecting India's foreign trade and investment. Read More...