How digitalization is key to maximizing export opportunities

Our 2022 Allianz Trade Global Survey   has revealed the huge challenges facing companies wishing to maximize export opportunities and expand their business globally. The most significant are:

1. Uncertain demand prospects due to Covid-19 (cited in 40% of responses given before the invasion of Ukraine)
2. High energy prices (35%)
3. High transportation costs (33%).

And these perspectives were shared before the outbreak of war in Ukraine which, as  as our economic outlook shows, is already having a highly negative impact on the global economy.

You can, however, adopt smart strategies to mitigate risk and protect both your revenues and import-export business opportunities in this increasingly volatile global trading environment. In this article, we look at how digitalization helps business and contributes to company performance.

One standout indication of innovation revealed by our survey is that +91% of companies have undertaken digitalization 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 digitalization helps business, we witness that firms are increasingly using blockchain technology to disintermediate and decentralize 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 brick-and-mortar institutions.

This approach could allow your company to react rapidly and in a far more flexible manner, enabling you to complete transactions faster, seize import-export business opportunities, and help successfully expand your business internationally despite global volatility.

Digitalization and blockchain technology in particular can give your organization the ability to:

• Significantly outperform the interbank SWIFT payment system. Blockchain-based platforms, such as Ripple and Worldpay from FIS are generally regarded a cheaper, faster and more secure 
  method of international payment. They also do not impose maximum limits, like those set by SWIFT. With the first part of our survey − conducted before the start of the conflict in Ukraine − revealing that payment times increased for 50% of businesses during 2021, transaction speeds will be a major factor enabling you to seize 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 tokenize, encrypt, and transfer bills of lading, along with any additional documents needed for the trade processes. This digitized 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 digitize the ‘rules of origin’ process, streamlining and speeding up product certification and mitigating customs clearance requirements.

There are two basic approaches to operationalizing blockchain technology in use by companies today: 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 looking like the increasingly attractive option for many organizations.

Reliable outsourcing companies benefit from streamlined and optimized 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 industrialized 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 maximize import-export business opportunities and to help your business expand globally. For more hints, tips and advice, download our Export Toolkit.