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Before thinking of exporting, one has to have enough knowledge of the markets they are considering to export to. It is also important to find whether the chosen countries require your product or not, and if they do, one has to have enough resources to start the trade (World Trade Organization - Global trade. 2018). These things are essential because exporting goods and services always looks like a simple and the best way to expand international presence in business, but just like setting up global operations, there are a variety of challenges posed by exporting. Problems such as differences in tax schemes, quality specifications, location and cultural differences among others can make even those countries that appear less complicated unfavorable for export. This assignment will focus on the factors to consider when exporting individually to Kenya and Vietnam.
Kenya has a strong economy, which is based on its market and it is often considered the heart of East Africa's commercial, economic and transportation sectors. Kenya has the most strong industrial foundation in East Africa; thus it has attracted numerous private equity capital from across the world. For this reason, more companies in the united states have been investing and setting up local operations in Kenya for the past one decade. Besides, the Kenyan shilling is quite stable for trade because its exchange rate is 100Ksh for one US dollar. For this reason, US exporters increased by 25% in 2015 (World Trade Organization - Global trade. 2018). All these things show that there are numerous opportunities for exporters. However, this does not mean that there are no challenges to watch out for when considering to export to Kenya. First, Kenya is a high-cost economy; therefore the cost of both educated and skilled labor is very high when compared to some other African countries.
Also, a substantial number of youths under 30 years are unskilled, and they survive in an environment that offers few employment opportunities (Mutuku & Mbithi, 2018). Nevertheless, Kenya has relatively productive skilled and non-skilled labor than its neighboring countries. Another problem is that although Kenya's infrastructure is more developed than that of its neighboring countries, it is relatively underdeveloped and this poses a significant challenge to its economic development. There is also very low-price competition in the Kenyan markets when compared to other developing countries on the rise even if the customers and companies hold high price sensitivity. This could be both a challenge and an opportunity for an exporter depending on the way the situation is viewed. Research shows that the government of Kenya is doing everything possible to increase price competition to improve market efficiency and if their efforts bar fruits, more opportunities will open for Kenyan exporters (Mutuku & Mbithi, 2018). However, more research shows that this issue is not a priority for the Kenyan government. Therefore there is a possibility that competitors will not increase their market share in Kenya.
The Kenyan market environment is not secure enough to conduct businesses, especially in the urban areas due to the high rate of crime and violence and any exporter has to have this knowledge. On the other hand, Vietnam offers the best trade opportunities for US exporters, which makes it an excellent chance of exporters from the rest of the world too. HSBC named Vietnam as the fastest growing trading partner of the United States making it an emerging market for US companies and individual investors (Newman, Rand, Tarp & Thi Tue Anh, 2016). Although Vietnam's economy is quite small compared to the economies of some of its neighboring countries like China and South Korea, it is home for numerous opportunities among legible exporters. Exporters to Vietnam should also know that the United States lifted its trade barn on Vietnam back in 1994, thus improving the relationship between the two countries. Ever since, the United States have been the largest exporter to Vietnam, and an immense source of foreign investment. These changes alone have intensified Vietnam's economic development immensely. It is also important to know that the Vietnamese government is developing the infrastructure by building some international airports, which means that there are more opportunities in Vietnam's aviation sector (Newman, Rand, Tarp & Thi Tue Anh, 2016).
Additionally, the industrial sector which comprises machinery manufacturing and chemical manufacturing technology have also been on the rise in the past few years meaning there are more opportunities in the industry. People considering to export to Vietnam should also watch out for consumer-oriented products and services such as customer products like food and franchising because they have been in high demand since 2015 (Low, 2016). For instance, there has been an enormous increase in the purchase of luxury cars such as BMW and Audi. BMW increased is sales to Vietnam by 2555 in 2016, and the sales kept increasing year after year. On the other hand, Audi, being the most purchased luxury car in Vietnam also sees an increase of 169% every year in sales (Newman, Rand, Tarp & Thi Tue Anh, 2016). The agriculture sector is also among the fastest growing industries in Vietnam; thus exporters should consider agricultural products and services. However, there are several challenges posed by Vietnam market that exporters should consider including the high level of corruption, strict trade laws and regulations and the tax structure in Vietnam among others.
In conclusion, before considering exporting to a specific country, it is essential to carry out a thorough market review to gain knowledge of a market's opportunities and challenges. This market survey is critical because some countries appear favorable for trade, but they are not, while others appear unfavorable and they are surprisingly helpful.
Low, P. (2016). International trade and the environment. UNISIA, (30), 95-99.
Mutuku, C., & Mbithi, B. (2018). What Drives Import Flows, Do Import Standards And Verification For Conformity Matter? A Panel Gravity Model for Kenya. Research Journal of Economics, 2017.
Newman, C., Rand, J., Tarp, F., & Thi Tue Anh, N. (2016). Exporting and productivity: Learning from Vietnam. Journal of African Economies, 1-25.
World Trade Organization - Global trade. (2018). Retrieved from https://www.wto.org/
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