Talking about foreign trade, there are no simple solutions, which is what makes it an unpopular topic with politicians. All the while, Estonia needs an active minister that could work in just that particular area, former minister of trade and entrepreneurship and current Reform Party MP Anne Sulling writes.
In an opinion piece in daily Postimees published on Jan. 16, Sulling makes the point that Estonia has neglected its foreign trade. It was neither part of the previous prime minister’s work group on the economy, which culminated in the so-called Raasuke report, nor is its promotion given priority in the new government’s coalition agreement.
The world’s economically most powerful countries work hard and are focused on making their foreign trade a success. Doing well in the export markets would mean that Estonian companies could find opportunities to sell their production volumes, and the resulting increase in turnover would directly translate into economic growth, Sulling writes.
That a product is innovative and has an edge over others, that alone isn’t enough, it needs to be taken to its target markets, and actively sold there. In Sulling’s opinion, the state still has plenty of options where improving support structures for companies are concerned.
Sulling describes some of the support models she has encountered over the last year how different countries support companies in their efforts to increase exports. Estonia could learn one or the other thing from them:
Singapore doesn’t limit itself to concluding as many free trade agreements as possible. Its so-called in-up-out strategy supports business by attracting investment (“in”), helping companies create added value (“up”), and then supports them abroad (“out”). According to the government’s data, every dollar spent this way gets them a return of 20 dollars, and guarantees the creation of additional jobs as well.
The strategy is calibrated very carefully. A team of observers keeps an eye on what is happening in the world markets, and which sectors are growing. That way, they see where the most value is created, and through different incentives get companies to follow trends. This means they can direct their business to markets that grow quickly. This is supported by a foreign network of 30 representations. For every new market, companies can apply for up to 100,000 dollars in financial support.
The Netherlands, with its so-called Brainport region around the city of Eindhoven, boasts the most new patents per capita per year. The way Estonia could run its development is already implemented there, and working very well.
The Dutch approach to foreign trade is smart rather than capital-heavy. Recognizing that the best way to get information is to talk to the people who have the latest and best of it, and who know their market as well, they have established a network of countries that help each other with information about how to navigate the local market. This is a key element of how they help companies to establish themselves abroad.
Another thing they do is analyze potential new target markets, the companies that work in them, and match this up with what Brainport’s companies have to offer. Sulling describes this as the same approach she took when she helped Estonian dairy producers sell on the Japanese market.
Brainport’s specialists advise companies in the creation of their marketing materials, and when the preparations are finished they take them to the target market and stay with them until the first important contacts are firmly made. This is particularly important in Asia, where the presence of a national representative contributes to building trust, Sulling writes.
Finland has consolidated its efforts in foreign trade, foreign investment, and tourism in a state-owned company, Finpro. A bit like Enterprise Estonia, Finpro employs 240 people, 31 of which work abroad. Its representatives are embassy residents and have clear targets in terms of developing foreign trade with the country they are in. To involve the ambassadors more, they are included in the responsibility to realize the company’s targets.
Team Finland, which brings all of the state’s related efforts together, coordinates all of this, supporting exporters, attracting foreign investors, and marketing Finland internationally. This is directed from the office of the prime minister, and hence given top priority.
There are those in Estonia that think the model should be copied, and a Team Estonia created. Sulling herself suggests a different approach, quoting a Team Finland representative who told her that their aim, namely the consolidation of state efforts, was Estonia’s starting point. Enterprise Estonia already takes care of that.
But if Estonia had a minister in charge of developing foreign trade, who could better direct Enterprise Estonia and coordinate efforts among the members of the government, parliament, and other institutions, then an independent structure beyond the existing one wouldn’t be needed, Sulling writes.
Given a stable team at Enterprise Estonia, a clear vision of the responsible minister, and the necessary budget support, seven things could be introduced to support Estonia's foreign trade:
Analysis: Enterprise Estonia could offer companies information concerning their business areas. This could result in recommendations of markets and places where companies could become active. So far, a coordinated effort to analyze markets hasn’t been made, Enterprise Estonia’s 12 export advisors cover ten different countries, but all only look at their own.
A more active approach could mean that Enterprise Estonia takes the initiative and offers companies the actual service of taking them to a foreign market. This service would not have to come for free, and this could only be done if Enterprise Estonia hired professionals with the skills and experience to do this.
More funding to support companies’ trade fair presence. At present, Enterprise Estonia arranges for some 16 to 17 single fair booths at different trade fairs a year. According to Sulling, this is not enough.
Cooperation with other countries’ networks could be beneficial, considering Estonia’s own small size and small number of trade representatives.
Officials beyond Enterprise Estonia and the government could promote Estonia abroad, for example the members of the Riigikogu’s Foreign Affairs and Finance committees, who could run trade delegations to export markets. Their political clout would be enough to make high-level meetings possible that businesses might otherwise have a hard time getting. To this end, the Riigikogu would have to allocate more money to cover MPs’ travelling expenses.
A foreign trade minister could concentrate on just this particular area. Naturally, that minister would need to speak English very well, and have practical experience in the foreign trade and exports sector.
The state would need to back these efforts up by creating its own marketing resources and introducing itself as a strong country of origin for the products and businesses to be taken abroad. Naturally, these materials would need to be of the kind that Estonian companies actually want to use.
Closing her comment, Sulling writes that whatever is done, popularity won’t be gained overnight. There are no easy solutions in foreign trade, which means that it couldn’t be handled by adjusting a tax rate here and there, or by making speeches. Hands-on work is needed, and the necessary competence to get it done.
What is taken up today will produce results years from now, which is why politically, any implementation of the points above would be difficult.
Anne Sulling is a former minister of trade and entrepreneurship, and a member of the Riigikogu for the Reform Party. The opinion piece this article is based on was published in Postimees on Jan. 16, 2017 (link in Estonian).
Editor: Editor: Dario Cavegn