Lust for exotic spices, opulent textiles and precious metals spurred the world's first trade routes and "international trade shows" via arcades and souks in ancient Greece, Rome and the Middle East. They were made possible by vital waterways, such as the Nile and Euphrates; hardscrabble land pathways such as the Incense Route and Silk Road; and the humble, hardworking camel.
Today, the centuries-old global-goods trade still exists, but it relies on instantaneous "global flows...of digital data rather than physical trade routes and slow-moving transport," says Digital globalization: The new era of global flows, a report from the McKinsey Global Institute (MGI). These "global flows [of digital data] make it possible for companies to reach international markets with less capital-intensive business models," notes the report.
This flies in the face of conventional wisdom that says globalization has stalled thanks to unusual international trade patterns. This is the fifth year of lackluster growth, making this the worst period since the 1970s, says the Financial Times.
"The value of world trade in current dollar terms last year fell by 13% to $16.5 trillion from $19 trillion in 2014," notes the World Trade Organization.
In part, this is explained by creeping protectionism, a slowing Chinese economy, rising European imports and other factors. Yet in the same Financial Times article, WTO Chief Economist Robert Koopman predicts global trade will start to "grow again at its long-term average of 1.5 times global GDP" thanks to structural changes. World Bank and the International Monetary Fund economists agree structural shifts are necessary and will spur growth.
Global Digital Data Flows Spur a Revolution in World Trade
MGI has it right: The new revolution in world trade is due to global digital data flows enabled by the internet. These data flows did not exist 15 years ago, and besides transmitting valuable streams of information and ideas, they "enable the movement of goods, services, finance and people," says MGI.
These digital data flows will also have a greater impact on GDP growth than any other trade model in history.
"The amount of cross-border bandwidth used has grown 45 times larger since 2005. It will increase nine times over the next five years as flows of information, searches, communication, video, transactions and intra-company traffic continue to surge," estimates MGI.
And "virtually every type of cross-border transaction now has a digital component," notes MGI.
Thanks to digital technology, thousands of small and mid-sized enterprises are turning themselves into exporters and joining marketplaces such as Alibaba, Taobao, Tmall, eBay, Amazon.com and Flipkart. Even the smallest firms can compete with the big multinationals thanks to digital flow: 86% of tech-based startups have some type of cross-border activity, according to MGI.
In short, the internet is becoming the old trading station, where buyers and sellers come together on demand. It fuels the second trading station, the trade show, which has shown steady growth and is going global. U.S., China and Germany are the top three exhibition markets in the world. Eighteen percent of U.S. companies attend foreign trade shows to gain sales and to gain business exposure. The U.S. Commerce Department has created an international buyers program where the agency partners with industry to bring international buyers to U.S. trade shows.
Today's Trade Shows Offer an Unprecedented Opportunity to Increase Sales
It is not surprising the U.S. government has focused on trade shows as the "trading station." According to the Center for Exhibition Industry Research, attendees are decision makers, and a company needs to be well prepared given the competitive nature of the shows:
- 83% of attendees have some kind of buying power
- 85% of decision makers say attending trade shows saves their companies time and money by bringing vendors together under one roof
- 79% of attendees say attending shows helps them decide what products to buy
- 91% of attendees say trade shows impact their buying decisions, because the competition is in one place, allowing for comparison shopping in real time
Most foreign companies are not making the most of international trade shows, as shown by the McKinsey Connectedness Index, which ranks 139 countries on the inflows and outflows of goods, services, finance, people and data. There is a huge gap in connectedness between the leaders--Singapore, the Netherlands, the U.S. and Germany--and the rest of the world. This helps explain why many foreign companies go to shows poorly prepared, forgetting the importance of cultural and language differences.
Americans have a highly connected economy. For companies hoping to do business in the U.S., their connectivity matters and strongly relates to how they present themselves and their ultimate success at trade shows.
9 Steps to Maximize Trade Show ROI by Building a Digital Presence
And first and foremost, a digital presence is a must in the U.S. It requires these steps:
- Building a digital presence through PR, in advance of, during and following a trade show;
- Digitally inviting a target list of buyers prior to a show;
- Having a mobile friendly website that has scheduling capabilities and comprehensive product information;
- Scheduling booth meetings before a show;
- Having a social media presence;
- Securing on-site media interviews;
- Selecting the best trade shows and attending more than one;
- Adding video with testimonials and marketing it strategically as the U.S. is a visual society; and
- FOLLOWING UP--do not let potential customers forget you.
It pays to work with a U.S.-based team to avoid potential day-to-day pitfalls, such as booth transportation, hidden exhibit costs, added display charges and poor locations. Costs and logistics make it clear why trade shows are the No. 1 investment for B2B participants in the U.S.
For foreign companies, on-the-ground local assistance can craft a winning market entry strategy worthy of their largest U.S. competitors. But even U.S. companies can benefit from working with teams to improve trade show ROI. After all, trade shows are the No. 1 marketing budget investment in North America, according to Forrester Research.
At the least, be forewarned: Thanks to connectivity and the digital data flow it enables, the new trade market is different than its predecessors in terms of how we define and market goods and services. Digital data flow has created a rift in the global world trade order. Companies that seek to market themselves at trade shows--which are a critical part of any trade and growth strategy today--must reinvent the way they do business to embrace digital data flows.