The Western Free Trade Zone created a space where various experts shared their knowledge on how a company can take advantage of internationalization by operating in a Free Trade Zone. This space also allowed guests to express their perspectives, concluding that there are various opportunities to successfully achieve the internationalization process.
What is a Free Trade Zone in international trade?
The first thing they warned is that they must continue working closely with the National Government on the regulation of the internationalization of companies, for example, that it should not only imply that users of free zones directly export goods or services, but that in order to generate productive links with other users of Free Zones or companies located in the national territory that are exporters, these indirect sales can be included.
But beyond the regulatory aspect, Free Trade Zone users involved in international trade in Colombia should know how to take advantage of this process. The first thing to understand is that this is not just an option for large companies, but also valid for all those with the people willing to achieve it. It goes beyond having significant financial muscle behind it; it's about being capable and agile.
Experts pointed out that it is time for organizations to consider strengthening their businesses through internationalization. Currently, many companies have shifted from selling only in Colombia to other countries, but are generating domestic employment and exporting quality products, so a large portion of their goods are sold to other nations.
Free trade zones in international trade are not only beneficial in Colombia; they have proven to play fundamental roles in other countries and are useful mechanisms for:
- Generate productive chains: It refers to the relationship of interdependence between different companies that participate in a value chain to produce a good or service and covers everything from raw materials to marketing and final consumption of the product.
- Formal and qualified employment: The internationalization of companies generates employment in free trade zones and complies with the regulatory standards of each country regarding labor.
- Consolidate logistics platforms: These are facilities that serve as meeting and redistribution points for goods, where transportation, storage, and distribution processes are coordinated. They are located in various locations, such as ports, airports, loading and unloading centers, railway stations, and industrial zones.
- Attract new capital investments: Companies that manage to consolidate and have innovative ideas may be eligible for investment to strengthen their position in the market, especially when they are in the process of internationalization and their potential is recognized by investors.
- Develop economies of scale: This refers to the reduction in production costs resulting from increased output. This occurs because fixed costs (such as machinery and building costs) are distributed across a greater number of units produced, which causes the value per unit to decrease. In addition, there may be reductions in variable prices due to the more efficient use of productive resources.
- Position themselves as commercial platforms: They facilitate the buying and selling of goods and services between companies, offering a wide range of products and services in one place, making the search easier for customers.
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Know the internationalization trends of companies
It's crucial for companies to understand what international consumers are looking for, as consumer habits have changed and vary by market. However, the most popular ones are:
- With healthy ingredients.
- Articles with social impact.
- Organic
- Natural.
- Handcrafted.
- Certified: They request products with certifications, for example, that they do not employ children or that they do not use any type of labor exploitation.
The phases of internationalization of companies
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Benefits of internationalization of companies in Colombia
There are many benefits a company can gain by including the use of free trade zones in its business strategy and beginning an internationalization process. When asked why this is a good idea, experts indicated:
- Increase revenueBy doing this, with the certainty that other international markets will pay more for those products or services, you practically guarantee an increase in revenue. This is important because—generally—before companies begin exporting, they must make a series of adjustments to ensure they are competitive in international markets.
- Leverage existing trade agreementsThere are many countries with which Colombia has signed agreements that offer incredible advantages, just to name a few, South Korea, where its businesspeople speak highly of the quality of Colombian products.
- Diversify risk. Making or selling to different markets allows you to have alternatives to fill the gap when you're in trouble.
- Position the brand, seeing companies in other countries is important as a Colombian business ecosystem and generates trust in Colombian companies.
- there are big opportunities in nearshoringMany investments previously made in Asia are being brought to Latin America, especially those related to manufacturing and indirect exports. The region is showing great strength in this area, and local production is driving a revival in Latin America.
- The latter leads to the strengthening regional value chains, since there's talk of the deglobalization of production because many companies, due to various uncertainties (lack of supplies), are leveraging nearby countries (Latin America) and regional trade agreements are once again gaining significant value. This results in the ability to export goods and services to countries that aren't too far away, and they also don't have complex regulations, which is ideal when starting an internationalization plan to gain experience.
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Know the internationalization trends of companies
It's crucial for companies to understand what international consumers are looking for, as consumer habits have changed and vary by market. However, the most popular ones are:
- Products that have or tell a story behind them.
- With healthy ingredients.
- Articles with social impact.
- Organic
- Natural.
- Handcrafted.
- Certified: They request products with certifications, for example, that they do not employ children or that they do not use any type of labor exploitation.
The phases of internationalization of companies
According to experts, there are three key phases to take advantage of the Free Trade Zone in international trade, starting with basing it on a plan for the internationalization of companies:
Market selection stage
You need to consider how to reach your target market and identify which ones offer the most opportunities. You also need to make a pre-selection before making your final decision.
Preparation stage
It was emphasized that—fortunately—reaching an international market is much easier today than it was 15 years ago; applying for the necessary documents is simpler, and planning will increase the chances of success.
In this regard, it's important to consider that there are tools that allow you to understand the demand for a product in a particular market, enabling you to make informed decisions. This includes exploring regulatory requirements, ingredient or product requirements, and even reviewing political and industry issues. A comprehensive market analysis is required to determine whether the markets are suitable for internationalization.
Execution and monitoring stage
Review whether products are being delivered on time, with the required quality, and under established conditions. This will correct delays and take the necessary measures to avoid losing customers and the internationalization process.
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The experts' final recommendation is always to approach the internationalization process of companies in free trade zones with empathy and a positive attitude; this will result in closing deals and providing good service, since international buyers look at the price, but also at how the team treats them.
Furthermore, it's important to constantly work on generating valuable connections with business owners from other countries and gaining insight into other markets and experiences. This knowledge of other regions or nations becomes an asset for implementing your internationalization plan. This includes other national companies with experience in foreign markets.
International trade opens doors to profitable business opportunities that contribute to the country's development. Take advantage of our location and facilities. Speak with one of our experts and become part of the world of companies building a better future.