International Trade As Competitive Intelligence

International Trade As Source of Competitive Intelligence for The Fine and Speciality Chemical Industry

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BOGDAN COMANITA, PhD/MBA MarketChemica Inc. Ottawa ON, K1H 5A4, ON Canada

International Trade As Competitive Intelligence ABSTRACT Buyers, sales and marketing executives used traditionally international trade data as a source for competitive intelligence in commodities and consumer goods. The small and medium size enterprises (SMEs) in the fine and speciality chemical industry have so far failed to acknowledge the value of this important secondary market research source. This article shows the value of using Chinese international trade data as a source of competitive intelligence for purchasing and sales functions. Buyers can identify new sources, monitor present suppliers, manage the supply risk, negotiate and ultimately buy with confidence. Sales and marketing can monitor competition, spot new sales leads or learn about new markets for their products. Both buyers and sellers can benchmark prices against the massive supply coming out of PRC, and understand the structure and trends of Chinese exports to the rest of the world. This information should inform both the tactical and strategic planning in every Western SME aspiring to stay competitive in the global village. INTRODUCTION Figure 1 illustrates the dramatic change that has occurred in the global chemical industry during the first st decade of the 21 century. PRC chemical industry that counted for roughly one tenth of the EU or US chemical industry shipments in 2000 has now surpassed the US output and is running neck in neck with the EU chemical industry. Under these circumstances, Chinese producers are increasingly a dominant power in the global trade of chemicals. This is why Western Executives, in particular purchasers, product managers, marketing and sales force need to focus their market intelligence efforts on the Chinese supply

Fig.1: Chemical Industry Shipments in billion $; Source: The American Chemistry Council:


The availability of international trade data from various regions of the world differs widely from one country to another and the response to globalization was different in terms of making information available. USA import/export data has already been available from a variety of sources for a long time and continues to stay transparent. On the contrary, India has actually increased the granularity of data after 2004 making available today information that is more useful at the macro than microeconomic level. EU continues its process of integrating trade information and remains much less transparent than US. Fortunately, China has made available its international trade data with a great degree of detail and reliability. Nevertheless, in order to gather competitive research from Chinese databases there are still important language and chemical knowledge barriers to overcome. This is why several US companies have joined forces with Chinese business information suppliers to make the data available to the international business community. Nevertheless the information provided is not yet entirely customizable and remains at a more granular level. This renders it less useful from the perspective of a buyer or seller in a manufacturing or distribution company who are generally interested in account specifics. MarketChemica is the only Western business information supplier that can provide an entirely customized market research service from PRC product by product. Since we specialize in the fine and speciality chemicals, MarketChemica’s Global Product Market Report™ provides an unrivalled insight in the PRC manufacturers and trading houses activities. Moreover, given that US and China have roughly two thirds of the international chemicals trade, based on the information made available for these two economic superpowers MarketChemica can trace with good accuracy the global supply chains including EU and other less transparent regions of the world. The present article illustrates the point by providing a sample with information on acetylacetone, a speciality chemical. The information dates back to 2006 so that it does not reveal the present competitive situation. THE 乙酰丙酮 (ACETYLACETONE) CHINESE EXPORTS

Figure 2: Sample of Chinese AcAc export activity Nov/Dec 2006 (AcAc = acetyl acetone)

Figure 2 shows an example of Chinese acetyl acetone (AcAc) exports during the month of November and December 2006. The data can be selected and analyzed by country of destination, date and supplier. The quantity shipped, $ amount and unit price are also provided.


. Figure 3: Chinese AcAc exporters and their export share Obviously, this can inform the business decision process both for sellers and buyers of AcAc. For examples one can quickly set apart manufacturers from traders and get an overall overview of their export market share (Figure 3). Establishing historic trends can inform a buyer that a particular supplier has a growing AcAc business which signals a healthy business with low supply risk. From an AcAc seller however, the same trend could signal another strong competitor and a more in depth analysis of its offering might be warranted. AcAc manufacturers generally know their national market size from their customer base. By monitoring the Chinese exports (Figure 4) to their own country they can establish trends and derive important information. For example, if Chinese exports grow at a faster pace than their own sales, this means that in fact the national producer is losing market share and needs to revisit the prospect of the product in his own national market. Moreover, one can also have a clear picture of the strength of each Chinese competitor in his own market. At the same time, US exporters can quickly learn about the magnitude of Chinese exports to foreign markets and track their progress in terms of market share. This is particularly difficult for EU countries that do provide important potential markets for chemical producer but little verifiable business information at the account/shipment level. Conversely, the Chinese import information will reveal opportunities and threats for AcAc exporters to PRC markets. The use of the Chinese export/import information can and should be used in combination with international trade data in other countries. For example, the use of Chinese exports with US import databases will help improve completeness and quality of information as no one database is 100% accurate. Even with the US import databases the research should be conducted preferably in more than one database as there is a certain level of missing information in each base and a certain advantage in using one source over another. By careful analysis of several sources of information it is possible however to connect the dots and gain powerful insights in the flow of chemical goods between these two important markets.


Figure 4: Chinese AcAc exports broken down by country CONCLUSIONS This article shows the value of using Chinese international trade data as a source of competitive intelligence for purchasing and sales functions. Buyers can identify new sources, monitor present suppliers, manage the supply risk, negotiate and ultimately buy with confidence. Sales and marketing can monitor competition, spot new sales leads or learn about new markets for their products. Both buyers and sellers can benchmark prices against the massive supply coming out of PRC, and understand the structure and trends of Chinese exports to the rest of the world. This information should inform both the tactical and strategic planning in every Western SME aspiring to stay competitive in the global village. MarketChemica offers specialized marketing services to the global fine and specialty chemicals industry. For more information contact [email protected]
