Tuesday, September 22, 2009

How to Export - Identifying Key Factors for Competitive Export Pricing

Ability to supply quality products at competitive price is a key success factor for any supplier. This is more so in international business where competition is not confined within one country or state. When exporters from various countries compete for same product - price, along with quality, play a crucial role in decision making.

Cost, demand and competition are the three key factors that determine final export price. To be successful in international market - you should be able to source or manufacture products at cost that is better than your competitors as sourcing or production cost is one of the most crucial factor in determining export price. Whether you are a manufacturer looking for competitive source of raw materials or merchant exporter - three factors play vital role here

  • Sourcing directly from producer, avoiding middleman as much as possible


  • Sourcing from geographical pockets that have traditionally excelled in producing export quality products


  • Leveraging govt incentives for export, e.g. special export processing zone, cheaper export credit etc.


Sourcing Directly from Producer

One can source almost everything from major cities like Delhi or Mumbai. However, in most cases, these products reach cities from hinterland through layers of middlemen, each of whom add a transaction cost. It is true that middlemen may also add value in terms of un-interrupted supply, consistent quality, low transport cost etc. However, you need to balance this with cost effectiveness of sourcing directly from producer. There is no omnibus solution - one should check various alternatives and take a decision that provides better sourcing cost.

Sourcing from Special Geographical Pockets

There are geographical pockets in India that have traditionally excelled in producing low cost products. Sourcing from such pockets may significantly reduce your sourcing cost. Following is a list of few such pockets

    Glass Bangles / Glassware

    Firozabad, also called the glass capital of India, is a small town in Uttar Pradesh, 40 km from Agra. This pocket accounts for roughly 70% of the total glass production in the small-scale sector. There is a large agglomeration of small-scale units engaged in the manufacture of hollow wares, decorative items, glass beads, bulbs, headlight covers, bangles, etc.

    Glass Beads

    Purdalpur, a village near Agra, Uttar Pradesh for North India and Papanaidupet, a village in Andhra Pradesh for South India.

    Home Furnishing Products

    Handloom and power looms are mainly used to manufacture various home furnishing products like table mats, durries, cushion covers etc. Though these products are manufactured in many states all over India (Maharashtra, Gujarat, Delhi, Tamil Nadu , West Bengal, Rajasthan, Andhra Pradesh, and Karnataka) - two geographical pockets have excelled in production and export of home furnishing products: Karur in Tamilnadu and Panipat in Haryana

    Metal Handicraft

    Moradabad in Uttar Pradesh, is renowned for brass work and has carved a niche for itself in the handicraft industry. It is believed that the brassware industry originated from Moradabad and spread to the rest of the country. Other geographical pockets of excellence in metal handicraft are Sambhal, Aligarh, Jodhpur, Jaipur, Delhi, Thanjavur, Jagadhari etc.

    Wooden Handicraft

    Saharanpur, in Uttar Pradesh, is famous for carved wooden handicraft and home of carving in hard sheesham, vice-leaf pattern. The range of designs include floral, geometric and figurative decoration, in addition to the traditional anguri and takai carvings, jali (fretted ornamentation), brass and copper and ivory inlay work. Some of the major products from Saharanpur are boxes, furnitures, candle stands, small utility items and other home decor items. Apart from Saharanpur, other pockets of excellence are Nagina, Hoshiarpur, Srinagar, Amritsar, Jaipur, Jodhpur, Bangalore, Mysore, Berhampur etc.

    Hand printed textiles and scarves

    Amroha, Jodhpur, Jaipur, Farrukhabad, Bagru and Sanganer

    Knitted Fabrics, T-Shirts, Hosiery

    Tirupur in Tamilnadu is the largest and best known centre of excellence in knitted fabrics and garments. Other important centre is Punjab and Gujarat

    Marble & soft stonecraft

    Agra, Tamil Nadu, Baster and Jodhpur

    Papier Mache crafts

    Kashmir, Jaipur Tamil Nadu and Andhra Pradesh

    Terracota

    Rajasthan, Tamil Nadu and Baster

    Zari & zari goods

    Surat, Agra, Varanasi & Amritsar

    Imitation jewellery

    Delhi, Moradabad, Sambhal, Jaipur and Kohima

    Wools and Woolens

    The woolen industry in the country is small in size and widely scattered. It is mostly located in Punjab, Haryana, Rajasthan, U.P., Maharashtra and Gujarat. 40% of the woolen units are located in Punjab, 27% in Haryana, 10% in Rajasthan, while the rest of the states account for the remaining 23% of the units.

    Jute and Coir

    Jute industry is highly concentrated with 59 Jute Mills (out of total 76 in the country) located in West Bengal. Kolkata and Howrah occupy a prominent place for jute and jute products. Kerala in the south is the main centre for coir and coir products.

There are many other centres of excellence in India other than those listed above. Please do your homework to identify centres of excellence near your place.


Labels: , , , ,

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home