35% drop in Iran's trade volume in the first half of the year exports that remained on the ground; From auto parts to shoes and chocolate

The deputy of Iran's trade development organization announced a 35% decrease in the country's trade volume in the first half of the year and said: "Increasing transportation costs, trade restrictions and weak international marketing have made Iran's exports face serious challenges."

According to the report of Ambassador Arjan, Amir Roshan, on Saturday, October 25, at the specialized meeting of export management companies (EMCs) in the Tehran Chamber of Commerce, emphasized the need to change the country's foreign trade approach, and announced a 35% drop in trade volume in the first half of this year.

He considered the increase in logistics costs, internal and external restrictions, and the weakness of international marketing as obstacles to export development, and emphasized the necessity of moving towards higher value-added goods and strengthening export management companies.

Iran's traditional trade has been neglected by market studies

Referring to the difference between traditional trade and professional trade, Roshan said: Trade in Iran still largely relies on the experience of merchants; This means that a merchant enters a market and offers a product, and other merchants follow his example and enter the same market. In contrast, global trade has moved towards more professional methods over the past two decades, and market studies have become one of the main components of exporters' activities.

Referring to the importance of knowing the target markets, the vice president of the Trade Development Organization of Iran added: One of the main questions of the private sector activists from the export officials is which product should be sent to which market. The answer to this question lies in market studies; An area that has received less attention in Iran, but has an important place in the world's professional business.

Stating that market studies have become a specialized and independent economic activity in many countries, he said: There are many companies and institutions operating in the world whose main business is the preparation and sale of market studies. Export management companies can also rely on this information to determine the path of Iranian goods entering new markets and reduce the possibility of commercial failure of companies.

The value chain can multiply the export value of Iranian goods

Referring to the average value of each ton of Iran's export goods, Roshan stated: As the head of the Iran Trade Development Organization also explained, the average value of each ton of the country's export goods is about 300 to 400 dollars. But by moving towards completing the value chain, it is possible to multiply the export value of many products.

Referring to the experience of the leading countries in world trade, the vice president of the Iran Trade Development Organization added: The review of China's experience shows that small and medium enterprises and the chains related to their activities play an important role in the production, export and employment of this country. In this meeting, Roshan pointed out the significant contribution of these enterprises in the Chinese economy, as well as the role of small and medium-sized enterprises in the economy of European countries, including Germany and France, and considered the development of this sector as one of the ways to increase export value.

Criticizing the high share of raw materials in Iran's export basket, he continued: Out of the country's total exports of about 52 billion dollars last year, according to the estimate presented in this meeting, about 65 to 70 percent was allocated to raw goods or products that can complete the production chain and increase their added value.

Roshan emphasized: This issue does not mean the necessity of stopping the export of raw materials; Because Iran has significant mineral and natural resources and should use these capacities. The main issue is to identify opportunities that can increase the value of export products by developing the next stages of production and processing.

The experience of Chinese export management companies in the Iranian market

Referring to his personal experience of the activities of export management companies in international markets, Roshan stated: For me, the question has always been raised as to how products with complex technology or even simple and low-complexity products get to distant markets from small producers; While many of these producers alone do not have the necessary knowledge, communication network and facilities for export.

Describing one of his experiences in connection with a Chinese activist in the field of auto parts, the deputy director of the Iran Trade Development Organization added: During the conversation with a representative of a Chinese company active in the field of export management companies, I realized that this group has a detailed knowledge of the Iranian auto parts market, parts manufacturing companies and the main players of this industry.

He continued: The Chinese economic activist had a wide familiarity with the Iranian market and had even identified some parts based on petrochemical products whose production in Iran had a price advantage. Such knowledge allowed him to identify cooperation opportunities between Iranian producers and the Chinese market and shape the path of export or development of commercial cooperation.

Referring to the presence of foreign export management companies in Iran, Roshan said: Research shows that there are about 70 Chinese export management companies in Iran, and each of them manages a part of their business activities in a specialized manner, focusing on certain goods and markets. This experience indicates that export management companies can identify opportunities that remain hidden from the eyes of many producers and exporters by knowing the market accurately and creating a communication network.

Iran's export management companies still do not have an effective role in foreign trade

Referring to the performance of export management companies in Iran, Roshan said: In the past years, due to improper definition or changing the definition of the activities of these companies, export management companies could not achieve the expected position in the country's foreign trade.

Referring to the surveys conducted on the share of these companies in exports, the vice president of Iran Trade Development Organization added: In previous evaluations, the share of export management companies in the country's non-oil exports was not significant. This issue shows that the specialized intermediary capacity of export and market development through these companies has not been sufficiently formed in Iran's economy.

Emphasizing the change in the approach of the Trade Development Organization, he continued: the organization's view is that export management companies should become capable groups that have specialized knowledge of target markets and can help develop the presence of Iranian goods in international markets, just like the successful global examples.

Referring to export incentives, Roshan also stated: In the mechanism of export incentives, about 25% more value has been considered for companies that help to develop trade as export intermediaries. The purpose of this support is to strengthen the role of export management companies and increase the motivation to use their specialized capacities.

Exporting high-value goods, a solution to reduce the pressure of transportation costs

Referring to the increase in transportation costs and logistics limitations, Roshan said: One of the main problems of Iran's exports is the high share of raw and low-value goods in the export basket. Raw goods usually have a large volume, but their export value is lower compared to the weight and cost of transportation; For this reason, the increase in transportation costs can greatly reduce the competitiveness of these products in the target markets.

Comparing the cost of transporting different goods, the deputy of Iran Trade Development Organization added: If the value of an export shipment is around 200,000 dollars, the imposition of 4,000 dollars in shipping cost may still maintain the possibility of its competitive supply in the destination market. But for goods with a much lower value, the cost of transportation constitutes a larger share of the final value of the product and can make export uneconomical.

Emphasizing the necessity of changing the composition of the country's exports, he said: the development of exports of goods with higher added value, in addition to increasing foreign exchange income, can reduce the effect of increasing logistics costs and provide the possibility of competition in markets where it has become more difficult to export bulky and low-value goods.

Referring to the importance of international marketing, Roshan continued: Finding a customer in the target market is one of the most difficult stages of business. The exporter must simultaneously compete with competitors, find new customers and plan to maintain its market share. However, in some parts of Iran's business, especially in the export of raw materials, international marketing professional processes have not been developed enough.

He added: Some big exporters rely more on responding to existing requests due to their well-known customers and traditional markets, and less go to emerging markets or new opportunities. Export management companies can fill this gap by identifying new customers, conducting market studies and developing business networks.

Warning about a 35% drop in trade volume in the first half of the year

Referring to the pressures on Iran's foreign trade, Roshan said: the set of internal and external restrictions has made the country's commercial activity more difficult. The number of decisions, changes in regulations, problems related to foreign exchange contracting and increase in logistics costs have reduced the speed of businessmen's activity.

Referring to the contribution of internal barriers to trade problems, the deputy of the Iran Trade Development Organization added: In addition to external restrictions, internal regulations and decisions also put considerable pressure on exporters. According to him, in some cases, these obstacles have made the export process more difficult and besides increasing transportation costs, they have affected the competitiveness of Iranian goods.

Referring to the analyzed statistics of the country's trade performance in the first six months of this year, he said: the volume of trade has decreased by about 35% in this period. The initial estimates of the organization also predicted a further drop, because in 1404, about 75% of the country's goods were moved through the Persian Gulf and Oman, and it was expected that other borders would not be able to compensate for all the sea transport capacity.

Roshan continued by referring to the efforts of various institutions to manage the flow of trade: with the cooperation of related institutions, part of the lost capacity of moving goods was compensated. According to him, the efforts made to maintain the flow of trade have reduced part of the pressure caused by logistical restrictions.

Business Atlas; A tool for identifying new export markets

Referring to the actions of the Trade Development Organization to identify new export opportunities, Roshan said: Using the trade atlas, this organization has made an intersection between the import capacities of the target countries and Iran's export capacity in order to identify opportunities that have received little attention so far.

Referring to the example of Belarus, the Deputy Director of Iran's Trade Development Organization added: "Reviewing the trade information of this country shows that Belarus imports 132 groups of goods, but Iran has exported only 24 groups of these goods." This difference can indicate opportunities for business development; Especially in areas where Iran has production and export capacity, but has not yet seriously entered the destination market.

Referring to Iran's neglected export capacities, he continued: there is a possibility to develop exports in areas such as auto parts, shoes, textiles, sweets and chocolate; But entering these markets requires understanding the demand, checking competitors, market studies and creating sales networks.

Emphasizing the necessity of using commercial information for decision-making, Roshan added: Commercial atlas and market studies can help export management companies to choose target countries more accurately, identify goods with advantages, and find the way to enter markets that have not received enough attention so far.

An export management company is a business approach, not just a license

Emphasizing the nature of the activity of export management companies, Roshan stated: Export management company should not be considered merely a title or an administrative license; This concept is an approach for market development and professional export chain management. Any group that can properly know the target market, find new customers and provide the basis for the export development of companies can use this approach.

Referring to the necessity of changing the country's trade pattern, the deputy head of the Iran Trade Development Organization added: Considering the existing restrictions, the increase in logistics costs and the difficulty of accessing international markets, continuing to rely on traditional trade methods cannot meet the country's export needs. The development of export management companies and moving towards products with higher added value are important ways to increase the competitiveness of Iran's trade.