Alibaba Group today published a study highlighting a global trend for European companies to export to overcome their local constraints. Interview with Michelle Lau, Co-General Manager of Alibaba Group in France, who discusses the results of this survey, highlighting the benefits of exporting.
The survey reveals that eight out of 10 European companies rely on exporting to boost their growth, resilience and innovation. Why do you think this is so?
I think that with all the difficulties companies face, they need to de-risk their markets. Exporting is useful in this sense. It allows companies to seek a certain level of operational maturity and unlock their pure growth.
There are many benefits that accompany exporting. Job creation, particularly through digitalisation, which allows companies to establish themselves in countries like China, which are more digitalised than in Europe. This is why brands stimulate their innovation through exports.
Moreover, we noticed during the health crisis that the companies that exported the most and digitalised the most were the most resilient.
Is this need to export at odds with the trend towards relocation?
In my opinion, it is not incompatible. There are two parts to the 'internationalisation' part of business. Firstly, there is the supply side, where there is a trend towards relocalisation, which means buying raw materials as close as possible to the final consumer, in order to avoid supply chain risks.
But on the other side of the value chain, there is export. We noted that many French companies were starting to export to nearby European countries to facilitate this process, before moving on to more distant markets.
Brands point to a need to diversify after the pandemic, which has led them to export to more distant countries. That's why it's not incompatible. It is rather a way of diversifying its clientele but also its replenishment centres in the various export countries.
How does exporting help to reduce the impact of risks linked to the local market?
Our study underlines that 79% of companies express that exporting allows them to contain the constraints linked to the domestic market. In my opinion, this is linked to the fact that consumer demands, products and buying behaviour vary from one country to another. So brands that export may have different products and a different strategy depending on the geographical area. By focusing only on a local market, if difficulties arise in that market, the company may face a certain rigidity in its strategy. Exporting brands, on the other hand, can react in a more agile way according to the needs of the different countries and thus reduce the local risk.
What are the main obstacles to exporting?
I think there are several key challenges when a company is considering exporting. The first is supply chain pressures, for 21% of the brands surveyed in our study. Indeed, exporting to distant countries requires a certain maturity to manage all the supply chain and logistics issues. This is why digital platforms support companies wishing to take the plunge.
A second major obstacle is export financing. Selling abroad requires a lot of production planning, and therefore a certain amount of investment. To overcome this, cross-border e-commerce platforms such as marketplaces have the possibility of testing markets in advance.
Administrative formalities can also be difficult to deal with when a company exports. Understanding and complying with the regulations of different countries can take time and support.
21% of companies started working with marketplaces during the health crisis, can we talk about a delay?
The pandemic was a very important accelerator for the digitalisation of French companies, whether or not they were late in starting, it's a very good point. Indeed, they were lagging behind other countries such as China, which had started this process more than ten years ago. But we can see that the situation is improving and moving in the right direction. Moreover, although the health crisis has passed, the trend continues. 42% of companies are now working with marketplaces to boost exports, 21% of which started with the pandemic. The important thing is that it continues.