Our 2022 Allianz Trade Global Survey has revealed the huge challenges companies face when wishing to maximise export opportunities and expand their business globally. The most significant are:
- Uncertain demand prospects due to Covid-19 (cited in 40% of responses, given before the invasion of Ukraine)
- High energy prices (35%)
- High transportation costs (33%).
These perspectives were shared before the outbreak of war in Ukraine which, as our economic outlook shows, is already having a negative impact on the global economy.
Businesses can, however, adopt smart strategies to mitigate risk and protect both revenues and import-export opportunities in this increasingly volatile global trading environment. In this article, we look at how digitalisation helps business and contributes to company performance.
How digitalisation helps global expansion
One standout indicator of innovation revealed by our survey is that +91% of companies have undertaken digitalisation efforts in recent years, with +42% of companies turning to blockchain-based technologies (such as cryptocurrencies and smart contracts) to unlock, simplify, and fast track export opportunities.
When looking at how digitalisation helps business, we see that firms are increasingly using blockchain technology to reduce intermediaries and decentralise the financial activity that underpins international trade. In practical terms, this means that transactions are taking place electronically and at speed, using distributed ledger technology rather than through the books of conventional bricks-and-mortar firms.
This approach could enable your business to react rapidly and in far more flexibly, enabling you to complete transactions faster, seize import-export business opportunities, and help successfully expand internationally, despite global volatility.
How digitalisation contributes to company performance
Digitalisation and blockchain technology in particular can give your organisation the ability to:
Significantly outperform the interbank SWIFT payment system
Blockchain-based platforms, such as Ripple and Worldpay from FIS, are generally regarded as a cheaper, faster, and more secure method of international payment. They also do not impose maximum limits, like those set by SWIFT. Our survey revealed that payment times increased for 50% of businesses during 2021, and transaction speeds could be a major factor impacting export opportunities going forward.
Fast-track the flow of global trade documentation between companies
In the example of bills of lading, blockchain document transaction systems are now available which enable exporters to tokenise, encrypt, and transfer bills of lading, along with any additional documents needed for trade processes. This digitised document transfer method is significantly faster, more secure, and more cost efficient than conventional methods.
Improve product traceability
Taking advantage of this capability, French retailer Auchan has implemented an international food traceability system using blockchain throughout its supply chain. After piloting this solution in Vietnam, it has applied the technology to track goods and services originating in France, Italy, Spain, Portugal, and Senegal, working in partnership with Te-Food. The system enables the tracking of different products from farm to fork and the recording of food quality data (and related logistical information) via QR codes.
Accelerate cross-border data exchange between governments and private firms
A prime example of this is where blockchain enables you to digitise the ‘rules of origin’ process, streamlining and speeding up product certification and mitigating customs clearance requirements.
Operationalising blockchain to unlock import/export opportunities
There are two basic approaches to operationalising blockchain technology: hiring an in-house team of developers, or outsourcing projects to third-party experts. Both have their merits, but with the race for digital talent intensifying and staffing budgets under pressure, outsourcing is an increasingly attractive option for many organisations.
Reliable outsourcing companies benefit from streamlined and optimised development processes, superior time to market capabilities, easier and faster workforce scaling, greater cost-effectiveness, and generally a richer set of tools and technologies at their disposal.
With major industrialised powers such as the USA, UK, and European Union announcing their intention to regulate cryptocurrencies and create their own central bank tokens, there is clearly still a great deal of untapped value and innovation to be unleashed in the blockchain space.
Blockchain technology may have the potential to help you significantly simplify and expedite international trade, but it is only one way to maximise import-export business opportunities and to help your business expand globally. For more hints, tips, and advice, dummydownload our top tips for growing your export markets.