04a-Introduction to Trade Map indicators.pdf

introduction for trades

1. Market Scan (1/2): Introduction to
Trade Map indicators
Cairo, March 2018

2. Overview
•Introduction to Market Scanning
•Introduction to Trade Map
•Staticindicators(marketsize, trade
balance, unit values,…)
•Dynamicindicators(growthrates,
…)
•Analysing a target market
•Assigningscores to variables
Learning Objectives
•To understandbasic tradedata
concepts
•To become comfortable in using
ITC Trade Map
•To compare and analyse potential
target markets in a Market Scan
•To be aware of additional Trade
Map features
Trade MapIndicators

3. Key steps to get to the right target market
Market Zoom
(9 Ps)
Panorama
People
Permission
Product
Price
Packaging
Placement
Promotion
Prospects
Market Entry
Key minimum
requirements
Differentiation
opportunities
Develop a
winning value
proposition
Identify your
target market
Understand your
target market
Get to the
target market
Market Scan
Size
Dynamism
Competition
Proximity
Diaspora
opportunity
Access
conditions
Market
Profile report
+
Group
presentation

4. Should we prioritize countries when we
want to export?
Pleaseselectthecorrectanswerfromtheoptionsbelow.
oYes,carefulselection,basedonsoundandsystematic
research,candeliverhugebenefits
oNo,youshouldfocusonlyonfindingbusinessleads

5. Feedback
Yes,carefulselection,basedonsoundandsystematic
research,candeliverhugebenefits
oNo,youshouldfocusonlyonfindingbusinessleads
Exportmarketresearchisexpensiveandprioritizingyour
researchtimeandresourcesisessential.Thismarket
selectionprocesshelpstoavoidcostlymistakesandcan
ensurethatyourorganisationisabletobuildsustainable
exports.

6. Why is market scanning important? (1/2)
Oftenmarketsarechosenwithlittleanalysis.Someexamplesof
potentiallyfalseleadsthatcanresultinpoorly-researchedmarket
selectioninclude:
•Unquestioningacceptanceofmediaarticles,seminarsand
conferencesthatfocusonlyon“hot”or“boom”markets
•A“tip”fromabusinessassociatewhosebusinessmaybevery
differentfromyourown
•Anunsolicitedordersuggestingthatthereishighpotentialfor
salesdevelopment–wheninfactitwasaone-offevent
•Positiveimpressionsgainedonaholiday–thatdonotreflectday-
to-dayreality
•“Followingtheleader”–knowingyourcompetitorsareactivein
thatmarket,andassumingyouneedtobetheretoo
•Lookingfor“comfortfactors”–marketswherebusinesssettings
appearonthesurfacetobeeasyandfriendly

7. Why is market scanning important? (2/2)
Acommonmistakeistodecideonaparticularmarketbeforeproper
research.“Itisthebestoneforyourfirstmoveintoexport.”
Eveniftheexporterisveryfamiliarwithamarket,itissmartnotto
assumeitisnecessarilythebestoneforhim.
Takingatimetodouble-checkifthereisnotanothermarketthat
mightsuitshispurposesbetter.Hemayfinditeasier–andmore
profitable–toestablishfirstsomewhereelse.
Alwaysapproachthechoiceofexport
marketswithanopenmind.

8. What is market scanning?
Marketscanninginvolvescomparingpotentialmarkets
againstvariouscriteriatohelpidentifyasuitablemarket

9. Practical exercise: Brainstorm
What criteria should
you take into
account to identify
an attractive market?
?

10. What does an exporter need to take into
account to select the right market?
•Whichmarketsareattractive?
•WhatproductsshouldIfocuson?
•Whatarethemarketrequirementstoexporttothesecountries?
•Whataretheconsumertrendsintheimportingcountry?
•WhatpackagingshouldIuse?
•WhatpricingstrategyshouldIuse?
•HowwillIpromotemyproduct?
•HowdoIobtaintradefinance?
•Whataretherisksofdoingbusinessinthesemarkets?
Exportersmustanalyseandcompareeachimportingcountry,thenselect
thecountrieswiththehighestestimatedimportpotentialfortheirproduct.
Thiswouldbeextremelytimeconsuming!

11. Market Scan
InordertoselectamarketefficientlywesuggestaMarketScan.
•Comparingmarketsacrossaspecificsetofcriteriathatareboth
availableandcomparableacrosscountries
•Methodforcombiningheterogeneouscriteriabystandardising
themandthencombiningthemtogetasinglecompositescore
•Enablesresultsinarankingofthedifferentexportmarkets
All importing
markets
Argentina
Brazil
Cambodia
Denmark
Egypt
…
Most attractive
markets
1. China
2. India
3. UK
4. Indonesia
5. Russia
…
3. Competition
1. Market Size
2. Market Growth
4. Market Openness
-Tariff level
-Tariff advantage
Market Scan

12. Market Scan Criteria
DuringaMarketScanweassesstradeandmarketassessindicators
inordertocomparetheattractivenessofimportingcountries:
•ImportpotentialwithTradeMap
–Marketsize:invalueandquantity
–MarketDynamism:annualgrowthrateovera5-yearperiod
–Competitionineachimportingmarket:concentrationindexof
supplyingcountries
•MarketopennesswithMarketAccessMap
–Tarifflevel:tarifffacedbyEgyptineachimportingmarket
–Tariffadvantageagainstcompetingsupplyingcountries

13. What do exporters have to be aware of?
Legal
system,
regulation
Trade Map
Market
Regulations
(health, safety,
etc.)
Custom tariffs
Import
restrictions
Different
Tastes
Competition
Business
contacts
What is the
demand for
the product
Global and
national market
dynamics
Standards

14. •Online application to analyse international trade flows
•Based on one of the largest trade flow database in the world
•Provides the trade indicators needed for our market scan
•Graphicpresentation of outputs to facilitate analysis
•User-friendly interface, report-ready outputs
WhatisTrade Map?

15. Trade Map –www.trademap.org
Click here to login or create your
account

16. Identifythe HS-6 code of yourproduct
•HS-6 digit Code
•National tariffline code
Analyse demand conditions and
performance for your product
•Market size and growth
•Market shares
Assessthe targetmarket
•Competition and distances
•Customer information
Market Scan using Trade Map

17. Which HS revision is used in Trade Map?
•Revisionsin1996,2002,2007,2012and2017
•Ineachrevision,productcodesmaybe:
–created(newsignificantproduct)
–removed(producthavebecomemarginal)
–reallocated(tradevolumechanged)
Theanalysisofsuchproductscodesshouldbeapproachedwithcaution!
Fortimeseries,therevisionappliedbythecountryinthereportingyearis
used.
For calculating trade indicators,HS revision 4 (2012) is used.

18. Productswewilluse as an example
080510 –Oranges
(fresh or dried)

19. Trade indicatorsin Trade Map
Market size
Marketgrowth/
Dynamism
Other performance indicators
More indicators…

20. Imports of buttermilk (040390)from all
countries using trade indicators
Whatdo thecoloursmean?

21. Mirror statistics
Australia
(reporting country)
Myanmar
(non-reporting country)
Iran
(non-reporting country)
Australia –
direct data
Iran –
mirror data
Impossible to get data
In Trade Map mirror
data is presented in
yellow colour

22. Mirror data: be careful
ImportsExport
Transportation and
insurancecosts
Price of
the
product
CIF: Cost
Insurance Freight
FOB: Free On
Board

23. Mirror data: example
Australia
(reporting country)
Iraq
(non-reporting country)
Exports of Iraq
Invoice Value $920
FOB value $920
Imports reported Australia from Iraq
Invoice Value $920
Insurance Paid $20
Freight Paid $60
Total CIF Value $1000

24. Marketsize
Market size

25. Marketsizecanbemeasuredintermsof
•Importedvalue(USD,EUR,SAR,…)
•Importedquantity(tons,litres,pairs,…)
Unit Value = Value / Quantity
Market size and unit values

26. Unit Value
Unit Value = Value/ quantity
Careful when interpreting, it is not a price paid in a shop by a customer.
•Unit values are an average over the whole period covered, however prices
vary across the year: e.g. vegetables
•Every product code contains many different product sold (even at NTL level)
•Value added by importing companies, tax, custom tariffs, etc. are not included
UV = Time and product average of prices paid
by importing companies

27. Trade Balance
•Oneindicatorofthehealththeeconomyanditstraderelationshipwith
therestoftheworld
•Mostwellknownindicatoristhenominaltradedeficitorsurplus
•Usuallybrokendownbyproductandbycountry(bilateralbalance)
Trade Balance = Exports (X) –Imports (M)
X > M Tradesurplus
M > X Tradedeficit

28. Growthindicators
Market growth

29. •Identify the top 5 importers of Oranges
(080510)in 2016 in value terms
•What is the growth rate of the top importer in
terms of value between 2012 and 2016? And in
terms of quantity?
•Identify the top 5 netexporters of Oranges in
2016
Time allowed: 3minutes
Quiz: analyze the market for a product

30. Butwhatdoesagrowthrateof2%reallymean?Youneedtocomparethe
growthwithabenchmark!
Demandisgrowing
Demandisstagnating
Demandisdeclining
•Ifannualgrowthrate(%)isgreaterthan0?
•Ifannualgrowthrate(%)isequalto0?
•Ifannualgrowthrate(%)islessthan0?
Compare growth of Egypt’sexports to the
world with the growth in world exports
overall
How doesEgyptperform
as comparedto other
suppliers?
Compare growth rate of target market’s
imports with the growth in world imports
overall
How dynamic is the target
market as compared to the
world market?
Compare growth of target market’s
imports with the growth of the market’s
imports from specific suppliers
Which of your competitors
are gaining or losing shares
in the target market?
What else can we do with the available
indicators:Benchmarking growth rates

31. What else can we do with the available
indicators:Trend in unit values
Growth in value
Growth in quantity
Growth in
Unit Value
Increasing
UV
Stable UV
Decreasing
UV

32. •WhatisEgypt’sexport growth rate in value
of Oranges (080510) in 2016?
•Is Egypt’sunit value for Oranges increasing
or decreasing in its main export market?
•Is Egyptgainingor losingmarketsharesin
the world marketof Oranges ?
Time allowed: 3 minutes
Quiz: analyze the export performance of a
country

33. Identifythe HS-6 code of yourproduct
•HS-6 digit Code
•National tariffline code
Analyse demand conditions and
performance for your product
•Market size and growth
•Market shares
Assessthe targetmarket
•Competition and distances
•Customer information
Analyzing trade using Trade Map

34. Other performance indicators
Other performance indicators:
Worldwide Imports of Buttermilk(040390)

35. Do you think that the French market for
oranges (080510) is concentrated or
fragmented?
List of countries exporting oranges to France in 2016
Source: Trade Map (March 2018)
Concentration in the Oranges (080510) market
Exporters Import Value ($ mill.)Market share (%)Method to calculate share
World 423 100
Spain 296 70 =296/423
South Africa 45 11 =45/423
Italy 14 3 =14/423
Tunisia 10 2 =10/423
Rest of the World 58 14 =58/423

36. The HerfindahlIndex
•A tool to measure concentration: can be used to measure
product or market diversification
•The index ranges from 1 to 0
1= only one supplier market very concentrated
0= many suppliers, each with very small share
market very diversified
•Rule of thumb:
< 0.01 = highly diversified
< 0.15 = not concentrated or diversified
Between 0.15 and 0.25 = moderately concentrated
Above 0.25 = highly concentrated

37. Quiz: analyze the competition in the market
•WhatisEgypt’s#1 importingmarket(in value) for
Oranges (080510)
•WhoisEgypt’smain competitor in its#1 importing
market(in termsof value) for Oranges?
•Is this market fragmented or concentrated? Why?
Is this good or bad for Egypt?
Time allowed: 3 minutes

38. Back to our Market Scan Methodology
All importing
markets
Argentina
Brazil
Cambodia
Denmark
Egypt
…
Most attractive
markets
1. China
2. India
3. Lebanon
4. Indonesia
5. Russia
…
3. Competition
1. Market Size
2. Market Growth
4. Market Openness
-Tariff level
-Tariff advantage
Trade evaluation
criteria

39. Assigning scores to variables
•Gothroughthecriteriaforevaluatingamarket
•Useascaletoassignascoretoeachindicator
Note:thisisnotascientificmodel.Thechoiceofscalesandcriteriaissubjective.Thisis
neverthelessagoodscreeningexercisetoidentifythemostattractivemarketthatyoufeel
warrantsmoreresearch.
Score Scale
5 Very large: above 25%
4 Large: between 15% and 25%
3 Medium: between 8% and 15%
2 Small: between 2% and 8%
1 Very small: below to 2%
•Each indicator has its own scale
•Each scale can be adapted to the
data range
Scale example

40. Assigning scores to Market Size
Indicator:Marketsharein2016oftheimportingcountryintheworldmarket
Explanation:Relativesizedeterminedbytheworldimportmarketshare
Marketsharedataarebasedonthelistofimportersof“080510Oranges”in
TradeMap.
Importing
country
Market
Share
(%)
Score
(1-5,
5=best)
France 8.2
Germany 7.4
Netherlands 6.9
Russia 5.3
Hong Kong 5.2
Score Scale
5 Very large: superior to 25%
4 Large: between 15% and 25%
3 Medium: between 8% and 15%
2 Small: between 2% and 8%
1 Very small: inferior to 2%

41. Assigning scores to Market Growth
Indicator:Marketgrowth
Explanation:expectedgrowthisdeterminedrelativetotheannualgrowthinvalue
between2012-2016oftheimportingcountry.
Figuresarebasedonthelistofimportersof“080510Oranges”inTradeMap.
Importing
country
Market
Growth
(% p.a)
Score
(1-5,
5=best)
France
Germany
Netherlands
Russia
Hong Kong
Score Scale
5 Very Fast: superior to 10%
4 Fast: between 5% and 10%
3 Slow:between 0% and 5%
2
Stagnate -Slowdecrease: between
0% and -5%
1 Fast decrease:inferior to -5%

42. Assigning scores to Competition
Indicator:Concentrationofsupplyingcountries
Explanation:knowingthedegreeofmarketconcentrationisuseful,asitreflects
thedegreeofcompetitionpresentintheimportingmarket.Ifthemarketis
diversified,itismorelikelyforanewexportertoenterthemarket.
Figuresarebasedonthelistofimportersof“080510Oranges”inTradeMap.
Importing
country
Concentration index
of supplying
countries
Score
(1-5,
5=best)
France
Germany
Netherlands
Russia
Hong Kong
Score Scale
5
Highly diversified :
below0.05
4
Diversified:
between 0.05 and 0.15
3
Moderatelyconcentrated :
between 0.15and 0.20
2
Concentrated:
between 0.20and 0.30
1
Highlyconcentrated:
above 0.30

43. Key points
•Marketscaninvolvescomparingpotentialmarketsagainst
variouscriteriatohelpidentifyasuitablemarket.
•TheMarketscanmethodologycombinesheterogeneous
criteriabystandardizingthemandthencombiningthemto
getasinglecompositescore.
•TradeMapprovidesindicatorsthatcanusedtointhe
MarketScanmethodologytoidentifyattractivemarkets.

44. Market Screening (1/2)
Please complete the table below by using a specific scale.
Which importing country ranks first according to your market scan analysis?
Marketscan of the top 13 largestimportersof 080510 Oranges
Importers
Market Growth Market Size Competition
Annual growth in
value between
2012-2016(%)
Score
Share in world
imports (%)
Score
Concentration of
supplying countries
Score
France -1 8.2 0.51
Germany -3 7.4 0.59
Netherlands -2 6.9 0.2
RussianFederation
-12
5.3
0.32
Hong Kong, China +11 5.2 0.28
China +22 4.7 0.26
Korea -1 4.2 0.91
UK -2 4.1 0.21
Saudi Arabia 0 3.8 0.39
Canada +1 3.5 0.56
USA +5 3.2 0.35
UAE +2 2.7 0.36
Japan -6 2.5 0.53

45. Market Screening (2/2): Scale
Please complete the table below by using the scales provided in the second page.

46. Limitations of with international trade statistics
•Inclusion of re-imports and re-exports
•The export value refers to the total or contract value, not the local
value-added
•Similar products may be categorized differently
•Exchange rate fluctuations are not always recorded
•Trade data are not complete: smuggling, non-reporting, mistakes, …
Mirror data

47. Let’s recap…
By the end of this section you should have a good
understanding of:
How to analyse world market demand and export
performance using Trade Map
How to analyze a target market using Trade Map