Need

for

a strategic

export in Peru

plan

Index 1. Introduction 2. Bases Del Plan 3. Rows of high export potential 4. Peruvian Current Situation 5. Colombian Model 6. Concluding Remarks 1. Introduction There is broad consensus about the enormous importance of the expansion and diversification of exportable products to achieve sustainable income growth and employment in the country, given the limited possibilities of development offered by the small domestic market to domestic producers. This is urgent, given the poor export performance registered by the Peruvian economy in comparison with neighboring countries of similar size, which is evidenced by their slow growth and low participation in foreign trade as a percentage of GDP. Therefore, if we are to achieve a sustained increase in production and domestic use should prioritize the development and implementation of a strategic export plan that includes an integrated set of policies that encourage domestic and foreign private investment, equal in

development of activities with high export potential of both goods and services in different economic sectors, incorporating a high added value and are, preferably, labor-intensive. To achieve measurable results in the short and medium term, it is urgent and unavoidable, develop and implement without delay the strategic export plan as the central instrument of economic policy in the country, which must be equipped with the highest possible resolution capacity with a wide range of authority in the coordination of activities with ministries, governmental institutions and associations representing the private sector. The plan must be comprehensive, multifaceted and consistent with the purpose of improving productivity and competitiveness of domestic production to achieve an effective penetration of foreign consumer markets, integrating the functions currently carried out various government agencies with its own objectives but uncoordinated against a target common to boost our export production. 2. Bases Del Plan The strategic plan should contain and deepened in the following without being exhaustive: 1). Define a priority in a participatory, consistent and effective management of trade policy by the State in the negotiation of regional integration agreements (or blocks) and bi-national trade agreements, in order to achieve tariff benefits domestic exporter and protection against unfair trade practices that limit their access to external markets. 2) Complementary to the previous point, you should incorporate guidelines and concrete actions to boost state agreements with countries that are potential investors in Peru, which must be reinforced by a very aggressive pipeline management and promotion of investments in private export goods and services. The executing agency should be able to continuously identify opportunities to continuously promote investment between private investors (domestic and foreign) administering a portfolio of strategic projects with proven private profitability, high value-added and high employment potential. 3) Implement a transparent tax and regulatory framework that provides broad guarantees of stability over time and become attractive and competitive investment in production in Peru, contemplating the elimination of various surcharges that affect their international competitiveness: review of the various tax regimes (IGV, IES, CSI, IR), streamlining the management of import tariffs on capital goods and inputs and the exemptions and tax refunds (drawback); review of tax depreciation systems, streamlining customs procedures and quality (ISO 9000); remove bureaucratic obstacles and other hidden costs to the investor, etc.. 4) Promote the marketing of exportable abroad by opening channels of information in the main consumer markets, developing and aggregates presence with sales offices in strategic places; outsourcing product promotion campaigns Peruvians abroad, and supporting the participation of producers national trade fairs and international events.

5) Encourage the formation clusters or activities linked to a group of small and medium producers linked to a geographic region, and the maquila promote projects through the development of industrial zones, commercial and service-oriented foreign market 6) Coordinate development projects in physical infrastructure in areas of export potential through private concessions that lower the cost of the chain of export support services (means of transport, customs, storage, telecommunications, ports, airports, etc..). 7) To promote the importation, local adaptation and development of new technologies or products or services linked to export, this includes: providing ease of installation and migration of skilled personnel from abroad, coordination of needs with the trade associations and individual producers, to encourage private regulated entities Plant health support and implementation of environmental standards; attract independent bodies to facilitate the ISO quality control of exports, among others. Provide education and modern technology to domestic and foreign human capital related to various projects and should include the development of technical skills and inventive entrepreneurs training in order to be experts in international marketing, recruiting experts and make international trade agreements, operating with the support of unions and associations of producers and potential investors. 9) Implement stabilization funds export commodities to ensure the regularity of foreign trade and income stability of domestic producers 10) To design financial mechanisms that facilitate access to credit and liquidity give exporting firms in terms of cost-competitive at the international level, and while granting credit facilities to enable foreign buyers of our products. It shall give special emphasis to the medium-term credit used to finance contributions of shareholders in capital increases aimed at modernizing and introducing technology export-oriented facilities, as well as chains or support projects and those of improving the physical infrastructure of regions particular export potential. 3. Rows of high export potential Here are some activities that have qualities to boost exports with high value added and laborintensive: * Agribusiness exports (fresh fruits and vegetables, dried and processed, medicine and natural foods, seafood and fresh fish for human consumption and processing, aquaculture, beekeeping, silkworm, processed and processed timber, fresh and artificial flowers, floral arrangements and ornamental plants, coffee, tea and aromatic herbs, etc.). * Artistic ceramics and fine craftsmanship of natural materials (windows, etc.). * Home Textiles made of natural fibers (alpaca, vicuna, etc.).

* Gold and native jewelry with unique designs. * Manufacturing of maquila in various areas such as microelectronics, apparel and sporting goods * Leather and footwear with native designs in general * Electrical energy, petrochemicals and gas derivatives. * Tourism receptive (). * Transportation and machinery (faucet, structures, basic equipment). * Information technology services, education, food, health, engineering, logistics, audiovisual, graphic design, tourism, financial, etc. * Services of tourism infrastructure (road and air transport, hotels, ecotourism, dining, sightseeing, tourism clusters, resorts, etc.). 4. Peruvian Current Situation The results achieved by Peru during the past years in terms of exports has been positive, from U.S. $ 3.500mm in 1989 to U.S. $ 6,100 MM in 1999, but lower when compared to that achieved by neighboring countries such as Chile (U.S. $ 18,000 MM) and Colombia (U.S. $ 11,600) in 1999, leaving Peru, more aligned with the levels of Bolivia and Ecuador, countries with relatively smaller. The Peruvian government action in this area has been fragmented and disjointed. Has been distributed in 5 main areas: 1). MINTINCI in negotiating international treaties and bilateral integration, 2) The Export Promotion Commission PROMPEX, promoting the development of foreign markets, 3) the Commission Promotion of Peru PROMPERU in charge of promoting foreign direct investment, 4) the Office of Economic Development of the Ministry and its aggregates business in different countries, and finally 5) the Directorate General of Customs to administer collection of tariffs, customs procedures and issuance of certificates of return drawbacks and finally 6) the Development Finance Corporation COFIDE offering discount lines to trade through local banks. Sometimes the efforts of these 6 government agencies have operated according to its own objectives, not always coincide with the interests of international competitiveness and in some cases leaving gaps in the chain of services required by exporters, all because there is no planning integral to the export sector. In order to achieve results in the next 10 to 15 years in terms of export growth suggests looking more closely the steps developed in the 80s and 90 neighboring countries that have succeeded in implementing aggressive export strategy as in the case of most similar neighbors, Chile and Colombia.

EXPORT MARKETING PLAN

Most entrepreneurs are not very keen on planning, which they consider of lower priority than the solving of day-to-day problems. Some seventy percent of all enterprises in the world lack good planning systems, particularly the SME. In developing economies, planning is not always embedded in the local culture, when short term vision might lead to opportunism. Planning is essentially the main task of management - where strategic vision and operational insight are brought together, translated into action. Management knows where the company should go in the future, management knows the company and is debriefed on the state of business on a frequent, often daily basis. Management is responsible for providing resources but primarily for providing direction (as the new ISO directives postulate). Therefore, the planning methodology should be one of the most important managerial tools. Since TPO's are charged with the health of their business clients, they should make sure that all managerial instruments are available and used well. Focussing on international business, planning is an even more essential instrument because strategy and implementation are separated by a distance which is hard to bridge. The products are designed and manufactured in the home country, their selling (and after-sales follow-up) is taking place abroad. That distance may lead to mistakes. When the distance is great, management can not come and solve problems on the spot. That is simply too far away. So management better think ahead, trying to foresee what will, may and should happen in order to avoid such mistakes. Customers expect no less. A good planning system is vital for exports. As explained before, all elements of doing business abroad and brought together, combined in a 'mix' which through that combination leads to optimal effectiveness of the company's output. An Export Marketing Plan does just that. It also serves the reliability of forecasting over a longer period of time and provides an estimate on costs (and profits, when calculating feasibility). Striking feature of an EMP is the chronological sequence of the activities required to prepare the export venture.

1. Purpose, function and form of an Exportmarketing plan

Basically, the Exportmarketingplan (EMP) shows everything you have devised for your commercial operations abroad. Its purpose, function and contents make it one of the most important strategic and tactical documents in your company.

The purpose of the Export-Marketingplan (EMP) is:

to bring all relevant marketing instruments together in a productive "mix"; give direction to all your planned activities for optimal effect. That direction is outlined in the objectives; estimate when the activities should take place. This timing will clarify the logical sequence. The same applies to the very moment results can be expected. That facilitates good management and sound decisionmaking; estimate how much the activities are going to cost, in order to make the money available whenever necessary; estimate the feasibility, deducting all costs from the profit to establish if the results are worth those costs.

The function of the plan is:

to inform all people involved about the objectives of the export operation; to give them specific instructions as to what their contributions to the export activities will be; to provide a certain justification for the money that will be spent in the export process. This justification is meant to convince the directors and owners of the company.

The form of the EMP:

the exportmarketing plan should be in written form (although some advanced Western exporters incorporate export planning in their computer-driven corporate planning). Parts of the EMP can - selectively - be distributed within your company and your Trade Partner's; the plan should be short, factual, precise and complete. It is not a manual nor a short story. Basically, it is a set of instructions, backed up by logical analyses and considerations. A brief outline for an exportmarketingplan follows hereafter.

2.a. Exportmarketingplan: General contents

EMP structure
1. Background information strengths and weaknesses of the organization corporate analysis, highlights from Export Audit present performance 'rationale' (arguments and considerations) as the basis for the decision to internationalise. 2. Product/Market Match (or combination) Specifying which product has been selected to sell to which foreign market; including the motivation for that P/M selection. 3. Objectives Marketing objectives (Turnover or T/O, sales, market share) financial objectives (profit/contribution) feasibility calculation (1-3 years). 4. Means Marketing mix (-instruments) organizational support required assistance from third parties total costs. 5. Action plan description of organizational tasks, project planning and timing schedule.

2.b. Exportmarketingplan: specification of plan elements

1. Background information description of present corporate situation. General commercial and financial situation. Ownership. History (if relevant). Main activity. Main policies / social justification etc. 1.1. Product (if not brought under second heading) Including packaging

specification (type, sort, size, dimensions, weight) technical details quality unique selling proposition / competitive advantage. 1.2. Past performance Show 3-5 years' historical performance: sales/turnover/profit/return per market, per product (category). 1.3. Users - (for consumer products: end-users or buyers) Profile customer / consumer, motivation for use, buying behaviour, spending power buying frequency etc. 1.4. Market Market characteristics (main markets only) trends, development, changes main competition (plus product range offered and prices quoted) general selling and promotion methods used by main competitors. 1.5. Distribution General description of distribution channels or methods to reach buyers same for entry strategies present export market relative importance of these channels / entry methods. 1.6. Promotion General description of promotional methods presently utilised at various levels of distribution and entry relative importance of those methods. 2. Export product/market match 2.1. Market selection Criteria for country selection country selection criteria for market (segment) selection market (segment) selection 2.2. Size of market selected Total demand in: volume (past/present/future) value (past/present/future); or: derived demand hypothetical demand. 2.3. Customer / consumer Specification of 2.2.: numbers location

other details required for market targeting. Comparison with 1.3. 2.4. Competition Competitive suppliers, product range/prices possible product substitutes comparison strengths/weaknesses vs. own products. 2.5. Export product Specification (compare with 1.1.) special (health, safety and other) regulations and norms governing export market selling. CE marking 3. Objectives Export Marketing Plan covers at least 1, preferably 3 (operational) years 3.1. Marketing Objectives sales volume market share brand awareness product improvement/adaptation/development target pricing policy distribution channels and entry strategy decided upon. 3.2. Financial objectives production costs transport and distribution costs promotion costs gross mark-up (operational) operational results. 3.3. Organizational objectives organizational measures, organigram task descriptions communication plan (with trade partner) training required. Feasibility calculation covers 3 (operational) years and should calculate cumulative results / break-even point. 4. Means covering marketing mix to achieve the plan's yearly objectives 4.1 The export product Technical aspects quality standards and control procedures performance standard, design, colour, flavour etc.

packaging terms of delivery. 4.2. Pricing price break-down / bottom-up price calculation terms of payment insurance currency aspects credit system selected; costs of interest for supplier's credit. 4.3. Distribution target customer / consumer group distribution & shipping methods description of trade partner(s) selected main items trade partner contract pre- and after sales services (design, repair maintenance, training etc.). 4.4. Promotion brand image / supplier's reputation selection of media research. Total promotional costs. 5. Action plan (operational year) What specific activities to be carried out when by which member in the organization at what costs ('what, when, by whom, how much'). 6. Supportive plans (operational year) liquidity (assessing liquidity requirements per month) debtors (assessing credit to buyers: per month) stock (requirements for product in stock per month) 7. Optional: contingency plans A prudent manager will ask himself what to do if conditions change so much that his plan loses its basis. Examples: the price of raw materials is going up unexpectedly, or the competition suddenly drops its prices strongly, a newcomer is entering the market with a much better proposition, pushing you out of a profitable account. Most managers can foresee such calamities and decide beforehand what to do if they actually happen, mostly through saving costs, making additional budgets available or introducing a new product variety. Foreseeing implies planning; such plans are called contingency plans ('what happens if...'). JLT 02-2001

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Peru
Development Challenges The Peruvian government has continued its policy of gradual economic liberalization in recent years. In 2011, Peru was said to have one of the worlds fastest-growing economies. Principally based on services, followed by the manufacturing of textiles and extractive industries such as agriculture, fishing and mining, the economic growth has been fueled by macroeconomic stability, improved terms of trade, rising investment and consumption. Perus main exports are copper, gold, zinc, textiles, and fish meal. However, Peru faces development challenges, including:
o o o o o o o o

Poverty and high levels of inequality Underemployment Corruption Growing cocaine production Poor infrastructure Informal economy Natural resources depletion and deforestation High dependent on minerals and metals exports and imported foodstuffs that subjects the economy to fluctuations in world prices

Key Trade Issues

o o o

Instability of politics and economy Informality Centralization of trade and industry in the capital

o o

High opposition in rural areas to Government extractive projects financed by foreign investment Need to completely recover from two-decade conflict - roughly from 1980 to 2000 between the state and the leftist guerrilla groups, the Shining Path and the Tupac Amaru Revolutionary Movement

Government Priorities
o o o o o o o

To promote tourism To reduce the national poverty rate To continue Perus free-trade path To increase regional and international integration especially with the United States, Canada, Singapore, China, Korea, and Japan To continue attracting foreign investment To enhance competitiveness To ensure a smooth democratic political transition

Trade and Tariff Graphs Open >

Graphs of the countrys export markets, its export performance in a key sector and tariffs exporters of a sample product face.

Trademap sample: The map uses color codes to illustrate the relative size of different markets in the overall exports of the country shown in pink.

Trademap sample: The vertical axis shows import values by key importing countries, while the horizontal axis shows export values by the country for the same sector. I.e. the country has gained market share in the case of an importing country at the bottom right of chart and lost market share for countries top left. The size of circles is proportional to market size. Market access map sample: The world map shows trade values and tariff levels for a key export product by importing countries. Color codes indicate protection levels. Red circles denote trade volumes.

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Current Projects Non-tariff measures - increasing transparency and understanding > Women and trade - Linking women business enterprises to corporate and institutional buyers > Export development in Peru's northern corridor > Empowering women enterprises to enter the US market > Latin Pharma 2011 > Planned Projects Recent Projects Peru - Programme development and support of the Peruvian national export plan > Peru Strengthening the Export Competitiveness of Women Entrepreneurs >

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Current Projects APEX Brasil - Enterprise competitiveness > Mexican foreign trade representatives regional training events > Non-tariff measures - increasing transparency and understanding > Women and trade - Linking women business enterprises to corporate and institutional buyers > Uruguay - national trade intelligence platform > Export-led & tourism-led poverty reduction programmes > Empowering women enterprises in the jewellery industry > Planned Projects Recent Projects APEX Brasil - Trade intelligence > APEX Brasil - Foreign trade training > APEX Brasil - Market analysis > Recent Events