How are Services Exported?
Many businesses in the services sector export without even realizing that they are doing so. There are four basic modes in which services are exported:
- Mode 1: Cross border – Where the service provider provides the service without themselves moving to do so e.g complete architectural or engineering drawings and sending them to the client by internet
- Mode 2: Consumption abroad – Where the consumer moves to consume the service e.g. in tourism where the tourist moves to the foreign country to enjoy accommodation services and attractions
- Mode 3: Commercial presence – Where the services provider sets up a commercial presence in another country and provides services from within the foreign company e.g. an accounting firm setting up a subsidiary in another country
- Mode 4: Movement of natural persons – Where the service provider moves temporarily to provide services in a foreign country e.g. the Consultant travels to another country for three months to conduct research and write a report for a client.
Strategic Alliances in Services Exporting:
The BCSP will assist Service providers with establishing Alliances with other organisations.
For small service providers, the establishment of strategic alliances is the quickest, cheapest and easiest way for a service company to export. Strategic alliances are highly, even decisively important to a small service provider’s export endeavours. Yet, this highly successful strategy is often overlooked in the development of export strategies in the Caribbean.
Exporting products and services, however, is the most common alliance strategy according to both Deloitte’s Corporate Development Survey[i] and the Inter-Company Marketing Group survey on strategic alliances[ii], with 1 in 3, in both instances, noting that strategic alliances in exporting was their company’s approach. Having a local partner – the right one – can be the difference between success and failure in a new market.
Strategic alliances are important to service exporters for a number of key reasons:
- Evading barriers to trade;
- Local understanding – i.e. benefitting from your partner’s market knowledge, including cultural understanding;
- Accessing local networks and distribution channels;
- Accessing national incentives;
- Accessing resources including office space and staffing;
- Benefiting from your partner’s credibility in the market.
[i] Deloitte’s Corporate Development Survey, 2012
[ii] Inter-Company Marketing Group Survey, 2012