Zona Franca de Occidente shared a space with different experts on how to take advantage of internationalization, that is, to know the use and knowledge of what is free zone in international trade in the free zones of Colombia, the guests gave their positions and there were points in agreement on the opportunities that exist to achieve the process successfully.
What is Free Trade Zone in international trade?
The first thing they warned is that they must continue to work closely with the National Government on the regulation of the internationalization of companies, for example, that it should not only imply that the free trade zone users to export export goods or services directly, but in order to generate productive linkages with other users of the free zones or companies located in the national territory that are exporters, these indirect sales can be included.
But beyond the regulatory part, users of the free trade zone in international trade in Colombia should know how to take advantage of this process. The first thing to understand is that this is not an alternative only for large companies, but it is also valid for all those who have people willing to achieve it, it goes beyond having a large financial muscle behind, it is about being able and being agile.
Experts pointed out that now is the time for organizations to consider empowering themselves with the internationalization of companies. Currently, many companies have gone from selling only in Colombia to other countries, but generating national employment and exporting quality products, which is why a large part of their goods are sold to other nations.
The free zone in international trade is not only beneficial in Colombia, it has proven to have fundamental roles in other countries and are useful mechanisms for:
- Generate production chains: this refers to the interdependent relationship between different companies that participate in a value chain to produce a good or service, from raw materials to marketing and final consumption of the product.
- Formal and qualified employment: the internationalization of companies generates jobs in free trade zones and complies with each country's labor regulations.
- 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 different places such as ports, airports, loading and unloading centers, railroad stations and industrial zones.
- Capture new capital investments: companies that manage to consolidate and have innovative ideas may be subject to investments to strengthen their position in the market, especially when they are in the process of internationalization and their potential is detected by investors.
- Develop economies of scale: this is the reduction of production costs consecutive to the increase in production. This occurs because fixed costs (such as machinery and building costs) are spread over a larger number of units produced, causing the value per unit to decrease. In addition, there may be reductions in variable prices due to more efficient utilization of productive resources.
- Position themselves as commercial platforms: they facilitate the purchase and sale of goods and services between companies, offering a wide range of products and services in a single place, which makes the search easier for customers.
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Successful data on the internationalization of companies in Colombia
Among the most outstanding and recent data of the free trade zone in international trade, it can be glimpsed how positive they have been in Colombia as contributors to foreign trade and drivers of exports. According to figures from Analdex and the DANE, there is a surplus trade balance as of November 2022 for a value of USD FOB 511.3 million .
The following graphs show the most important destinations and origins of the internationalization of companies in their exports and imports:
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Benefits of the internationalization of companies in Colombia
There are multiple benefits that a company can have if it includes in its business strategy the use of the free zone in international trade. free trade zone in international commerce and begin a process of internationalization, to the question of why it is good to do so, the experts indicated:
- Increase income. By doing this process, with the certainty that other international markets will pay for these products or services in a better way, the increase in income is practically assured, something that is relevant because -usually- in order to start exporting it is necessary to make a series of adjustments within the companies to make them competitive in international markets.
- Take advantage of existing trade agreements, there are many countries with which Colombia has signed them and they give incredible advantages, just to name a few, South Korea, where their businessmen speak highly of the quality of Colombian products.
- Diversify risk. When you are in trouble, selling or selling to different markets allows you to have the alternatives of supplying the same with other options.
- Positioning the brand, seeing companies in other countries is important as a Colombian business ecosystem and generates confidence in Colombian companies.
- There are great opportunities in nearshoringMany investments that were made in Asia are being brought to Latin America, everything that has to do with issues such as maquila or indirect exports. The region is having a lot of strength on this front and nearshoring is generating a reactivation in Latin America.
- The latter leads to the strengthening of regional value chains, since we are talking about the de-globalization of production because many companies are leveraging on nearby countries (Latin America) due to the different uncertainties that are occurring (inputs are not arriving) and regional trade agreements are gaining a lot of value. As a result, goods and services can be exported to countries that are not too far away and do not have complex regulations, which is ideal when starting an internationalization plan to gain experience.
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To know the internationalization trends of companies.
It is essential for companies to know what international consumers are looking for, since consumption habits have changed and vary depending on the market, but the preferred ones are:
- Products that have or tell a story behind them.
- With healthy ingredients.
- Articles with social impact.
- Organic.
- Natural.
- Artisanal.
- Certified, they request products with certifications, for example, that they do not hire children or that they do not use any type of exploitative labor.
The phases of company internationalization
There are three key phases that the exhibitors indicated are the bases to take advantage of the free zone in international trade, based on a plan of internationalization of the companies:
Preparation stage
It was pointed out that, fortunately, it is now much easier to reach an international market than it was 15 years ago; applying for the necessary documents to do so is simpler and, if planned, there is a greater chance of success.
Market selection stage
It is necessary to examine how to reach the target market and to know which are the ones that offer the most opportunities. You also have to make a pre-selection and then make the final decision.
In this aspect, it is necessary to consider that there are tools that allow to know the demand for a product in a particular market, in order to make determinations, besides exploring the regulatory part, the requirements on ingredients or the product, including reviewing the political and industry issues. A market analysis is required to know if the markets are the right ones for internationalization.
Execution and follow-up stage
Review whether the products are being delivered on time, with the required quality and under the established conditions, thus correcting delays and taking the necessary measures to avoid losing customers and the internationalization process.
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The final recommendation of the experts is always to approach the process of internationalization of companies in free zones. internationalization process of companies in free trade zones with empathy and good attitude, this will result in closing business deals and providing a good service, since international buyers look at the price, but also at how the work team attends them.
In addition, we must always be working on the generation of valuable connections with entrepreneurs from other countries and learn about other markets and experiences, this knowledge of other regions or nations becomes a value to realize the internationalization plan. Even other companies from other nations with experience in foreign markets.
