Deputy Minister Samet: Iran's export markets in the south of the Persian Gulf were lost

The head of the Iran Trade Development Organization emphasized the need to preserve the credibility of Iranian products and said: entering the export markets should not be done without considering the quality of the goods and the requirements of the destination market.

According to Ambassador Arjan, the development of Iran's non-oil exports is not limited to increasing the volume of exchanges, and improving the quality of goods, maintaining target markets, and increasing the added value of export products are also important in this direction. In this regard, the Trade Development Organization of Iran has focused on strengthening export management companies and export consortia so that small and medium enterprises can have a more professional presence in international markets by using the specialized capacities of these groups.

Mohammad Ali Dehghan Dehnavi, head of the Iran Trade Development Organization, on Saturday, October 25, at the specialized meeting of export management companies (EMCs) in the Tehran Chamber of Commerce, emphasized the need to professionalize export activities, and announced the program of this organization to evaluate the capabilities of exporters and guide them towards professional activities. He also emphasized the role of export management companies in preventing destructive competition, maintaining target markets and developing alternative export routes.

Iran's non-oil exports are far from the country's economic capacity

Referring to the performance of Iran's non-oil exports last year, Dehghan Dehnovi said: the country's non-oil exports reached about 52 billion dollars despite all the problems and restrictions. Last year was associated with various incidents, including the Shahid Rajaee port incident, the 12-day war, the events of January and the March war, but the performance of Iran's non-oil exports was still ranked third compared to previous years.

Comparing the export performance of Iran and Türkiye, the head of Iran Trade Development Organization said: Türkiye exports about 350 billion dollars of goods every year. In other words, this country exports nearly one billion dollars on an average daily. Iran's economic capacities in the fields of oil and gas, energy, mining, value chains and expert human resources also show that the country's export capacity is much higher than the current level.

Emphasizing the gap between Iran's export performance and the country's economic capacities, he added: weekly exports of about one billion dollars, considering Iran's natural resources, production capacity and entrepreneurial capacity, is not a proportionate figure, and the country can achieve a much higher level of exports.

The value of each ton of Iran's export goods is low

Referring to the composition of Iran's export goods, Dehghan Dehnavi said: the average value of each ton of the country's export goods was around 300 to 400 dollars in different years; While the average value of each ton of goods imported to Iran usually reaches 2 thousand dollars or more. This difference shows that a significant part of the country's exports is dedicated to goods with low added value.

The head of the Iran Trade Development Organization continued: Some Iranian goods, after being exported to other countries, have a significant increase in value by performing one or more processing steps. If these stages of production and investment are done inside the country, more added value will be given to Iran's economy.

Emphasizing the necessity of moving towards the export of products with higher added value, he noted: Iran's non-oil exports being in the range of 50 to 60 billion dollars, despite the progress of the past years, does not mean the full use of the country's capacities, and to increase the value of exports, production and processing chains must be developed.

How do export consortia reduce the cost of entering new markets?

Explaining the role of cooperation between economic enterprises in the development of exports, Dehghan Dehnavi said: cooperation in economic activity is not necessarily limited to the formation of conventional cooperatives and can also be formed in the form of export consortia. In this model, several economic enterprises cooperate with each other and use common capacities to enter international markets.

Stating that market research is one of the important costs of entering new markets, he explained: it may cost about 200 thousand dollars to conduct a scientific and detailed research to check the sales capacity of a product in a new market; A figure that many small and medium-sized enterprises are unable or unwilling to pay. As a result, some of these firms refrain from entering new markets or enter a market with insufficient information where failure could cost the economy more.

The head of Iran Trade Development Organization added: If 10 companies pay the cost of such a research jointly, the share of each company will reach 20 thousand dollars. The participation of 20 companies will reduce this share to 10 thousand dollars and the participation of 200 companies will reduce it to 1000 dollars. In this way, companies can access information at a lower cost, which is not possible for many of them to obtain independently.

Referring to the capacity of developing export cooperation, he pointed out: In addition to sharing the costs of market research, consortia can help to create a common brand, formulate cooperation rules and regulate competitive relations between members. These collaborations are especially important for companies that do not have enough financial or expertise to be present in international markets.

export management companies; The entry path of small companies to global markets

Explaining the difference between export consortia and export management companies, Dehghan Dehnavi stated: In an export consortium, companies with relatively similar capacities and needs cooperate to achieve a common goal; But the export management company can provide export services to a set of small and medium producers using its specialized capabilities.

He continued: A professional export management company must know the principles of international trade, have knowledge of international marketing, know the routes to enter the target markets, and have the necessary human resources and business connections. Such a company can help 10, 20, 50 or even 100 small and medium enterprises to bring their products to the target markets.

Referring to the situation of export management companies in Iran, the head of the Iran Trade Development Organization said: During the past years, a significant number of companies have been registered with this title, and some of them have performed well, but the evaluations carried out last year showed that all registered companies do not have the necessary capacity to provide specialized services.

Explaining the need to review the rules of these companies, he added: In some cases, a company was operating under the title of export management, but when a manufacturer applied to export to a specific country, the company itself had to start research and planning from scratch. In such a situation, there was no significant difference between the capabilities of the export management company and the company that needs its services.

Dehghan Dehnavi, while referring to the amendment of the activity guidelines of export management companies, said: Trade Development Organization has tried to determine the real capacity of these companies by revising the guidelines and developing a rating system. In this system, the ability of companies to provide export services is taken into consideration and they are asked to determine the target countries and specialized areas of their activities.

He emphasized: Limiting the number of first-ranked companies does not mean blocking the activity of other groups. New companies can start their activities, improve their capabilities and continue to reach higher ranks. The purpose of this rating system is to identify capable groups and to provide the basis for the gradual growth of other companies.

Trade Development Organization's program to prevent the export of low-quality goods

Referring to the damages caused by the activities of non-professional exporters, Dehghan Dehnavi said: One of the problems of Iran's exports is the entry of exporters into the target markets who do not have enough capacity for professional activity, but can damage the reputation of Iranian goods. These exporters sometimes provide the ground for weakening the brand of Iranian products in foreign markets by breaking prices, negative competition and supply of low-quality goods.

Stating that some exporters have a short-term view of foreign markets, he added: An exporter who does not have a plan for a stable presence in the target market may export a large volume of goods at an inappropriate price at one point in time and harm other Iranian exporters as well. Such behavior is observed in some markets of agricultural products; In such a way that sometimes the selling price of Iran's export goods in the destination market is even lower than its domestic selling price.

The head of the Trade Development Organization of Iran emphasized the necessity of maintaining the credibility of Iranian products and stated: Entering the export markets should not mean that any exporter can supply goods regardless of the product quality and the requirements of the destination market. Competition in foreign markets is necessary, but competition should be based on better quality, professional competence and compliance with market requirements, not by destroying the price and weakening the credibility of Iranian products.

Referring to the role of export management companies and export consortia in organizing the activities of exporters, Dehghan Dehnavi emphasized: these groups should help prevent the formation of destructive competition and provide the basis for a more professional presence of companies in the target markets. Especially in the strategic markets to which Iran has allocated a significant share of its exports, it is more important to maintain the quality of the goods and the commercial credit of the country.

assessment of export readiness; A new measure to support exporters

Dehghan Dehnavi explained the program of the Trade Development Organization to evaluate the ability of exporters and stated: This organization is preparing a model called "Export Readiness Evaluation Index" which is also used in many countries of the world. The purpose of implementing this model is to measure the level of readiness of companies for professional activity in foreign markets.

Referring to the initial criteria for evaluating export readiness, he added: In this evaluation, things like the product having a catalog and brochure, the specific characteristics and technical specifications of the product, compliance with related standards, and the existence of the basic infrastructure of international activity in the company are examined. Having a website, international business section and professional contact information are also among the basic requirements that can show a company's readiness for export.

Emphasizing that the implementation of this program does not mean an immediate ban on the export of a group of exporters, the member of the delegation of the Tehran Chamber said: "The current laws and regulations do not give such an opportunity to the organization, and the program in question is not going to be implemented from the beginning with a restrictive approach." The Trade Development Organization intends to guide exporters to improve their capabilities and comply with professional requirements through incentive mechanisms.

Referring to the possibility of linking export support to the results of evaluations, Dehghan Dehnavi explained: the services of business consultants, the facilities of business centers and export incentives can be provided gradually based on the level of readiness and capability of enterprises. Iran has commercial advisers in 18 to 19 countries and the targeted use of the capacity of these advisers can help increase the effectiveness of export services.

He added: Commercial consultants are faced with a large number of service applicants, while not all applicants are equally prepared for export. Evaluating exporters' capabilities can lead to prioritizing services and better use of consultants' time and expertise. Harmonizing the incentives of different institutions and strengthening financial support can also be a part of this incentive system.

Inviting capable activists to enter the export management business

Emphasizing the limited number of capable export management companies in the country, Dehghan Dehnavi said: some active companies in this field perform well, but their number is not enough to respond to Iran's export capacities. We invite individuals and groups who have knowledge, connections and proper business facilities in specific foreign markets to pursue activities in the field of export management as a specialized business.

Referring to the economic capacity of export management companies, he said: an export management company can provide a market for 20 producers; What any producer would do alone would require extensive investment in production, marketing and export. The export management company can benefit from the economic benefits of their export development by providing specialized services to these producers.

The head of the Iran Trade Development Organization added: Professional activity in the field of export management, in addition to positive effects on the country's economy and the development of non-oil exports, can also create significant economic benefits for the companies providing these services. The Trade Development Organization also continues to support these groups and tries to direct small producers, enterprises with limited direct and commercial export capacity, who intend to enter new markets, to export management companies.

Export management companies have a stronger role in the conditions of trade restrictions

Dehghan Dehnavi pointed out that Iran's export activities have become more difficult due to economic and trade restrictions and said: The existing restrictions have made it more difficult for Iranian companies to export and have increased the cost of accessing foreign markets. In such a situation, export management companies should play a more active role in identifying alternative routes, formulating operational strategies and maintaining target markets.

Emphasizing the need to prevent the loss of export markets, he continued: export management companies should design implementation solutions for markets that are at risk of loss. Part of these measures can be related to finding new ways to access the market and another part to moving goods to new destinations or expanding presence in existing markets.