As businesses grapple with the effect of COVID-19 on global supply chains and issues of geopolitical instability, and with global sustainability and emerging technologies weighing on the minds of business decision makers, international trade is more complex than ever before.
New research from EY shows that this fact is not lost on businesses, with the vast majority of trade professionals we spoke to saying that their organisation’s trade strategy is viewed as more important than ever by the c-suite. With businesses concerned about rising protectionism (69%), sustainability and climate change (64%) and technological disruption (59%).
However, our findings also show that, while almost all businesses have the basics of trade success in place – a defined strategy and dedicated capabilities – there are still significant skills and confidence gaps that may be holding them back from delivering long-term strategic value as they look to structure and expand their international operations.
Around half of businesses say they lack skills in specific areas such as ‘intellectual property’ and ‘digital regulation’ but there are also other, broader areas that many businesses are neglecting – most notably, government affairs.
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For international businesses, building relationships with government – even at a local level – is valuable both when it comes to tactical issue resolution and more strategic objectives such as inputting into trade policy developments and negotiations. Despite this being a key aspect of a successful trade strategy, few businesses feel confident engaging with government and less than half believe they have the relevant skillsets in house to do so.
Ultimately, this is emblematic of a wider issue: existing trade strategies often focus on operational elements, such as compliance or regulation, as opposed to more strategic ones, such as identifying new markets or engaging in trade policy development. Thus, businesses are seemingly setting themselves up to have a trade function that is extremely well run but lacking in the impact it has on overall business goals and objectives.
Addressing skills challenges can help businesses gain a strategic edge
Rectifying this will likely require businesses to develop their trade expertise, but this is no simple fix. Most survey respondents said they struggle to find individuals with the right experience, particularly in more senior positions. However, one initiative that any business looking to improve their trade teams – and overall strategy effectiveness – can undertake is an internal skills audit. Often expertise exists within a company, but key decision makers are unaware of it, and relevant staff aren’t equipped to collaborate and align on wide-ranging trade objectives. Existing trade staff are often split across departments and ensuring they are joined-up is low on the priority list – a fact that needs to change if businesses want to be able to communicate trade goals effectively to the senior team and external partners.
Businesses may also want to go one step further and create a dedicated team focused on trade strategy. While some may be initially hesitant to take this step, businesses that have done so demonstrate significantly greater confidence in strategic trade areas such as ‘new market opportunities’ and ‘government engagement’.
Whilst 81% of businesses say that international trade strategies are more important than ever, only 48% are currently looking to expand their trade teams.
The fact that most businesses have the basics of trade in place already is positive, but in today’s fast-changing world, those lacking adequate trade knowledge risk being left behind. The need for specialists with an ability to network internally with other pockets of trade expertise and externally with government departments is more important than ever. Only when they progress beyond the basics will a business truly be able to say they are experts in international trade.
However it’s done, businesses need to renew their efforts in international trade, and given how quickly the landscape is shifting, they cannot afford to be slow to act.