IATTO FORUM – EXPORT SUMMIT II A survey on national promotion strategies SEVE’s 3 year Export Business Plan for the Greek Economy Dr. Tasos Alexandridis SEVE, Executive Member of BoD Ms. Maria Kechagia Economic Analyst of Institute of Export Research & Studies 25 September

2 -9% of the Greek companies record income from export activity -Exports of Greek companies as % total income: 2% when EU27 average: 4,6% Main challenges: 1. Absence of human resources skills for internationalization 2. Absence of financial resources and financial support 3. Absence of exploitable information/ knowledge related to foreign markets (consequence of the previous 2 challenges) Factors of extroversion – Greek companies Absences/ ChallengesInternationalization problems Absence of human resources skills for internationalization  Inefficient number or/and inefficient trained staff for the implementation of internationalization actions  Lack of time for extroversion issues management  Lack of time and funds for training Absence of financial resources and financial support  Inefficient capital for funding of export activities  Tax disincentives for exports  Bureaucratic custom procedures  High cost for product transfer and insurance Absence of exploitable information / knowledge related to foreign markets  Inefficient or/and restricted information on opportunities tracking & new markets analysis  Achievement of reliable representation abroad  Problems ensuring appropriate and reliable transport  Complexity of distribution abroad

3 1. Lack of National Extroversion Vision 2. Lack of National Strategy, Goals and Directions for Exports 4. Lack of Targeting and failure to adapt Greek Products to new facts 8. Lack of accurate information to the Export Business 7. Lack of systematic training in the Area of Exports 5. Non – Active role of extroversion Actors LACK OF COHERENCE AND COORDINATION OF NATIONAL EFFORTS TO BOOST EXTROVERSION Lack of common vision, strategy, objectives and guidelines 6. Unequivocal orientation of Export Support Actions 3. Lack of Supporting framework for exporting businesses Large Number of Extroversion Bodies Overlapping Responsibilities Lack of Coordination Absence of Monitoring and Supervision Mechanisms WEAKNESSES OF EXISTING GREEK EXPORTS’ SUPPORT SYSTEM Greek Export Support System – What’s going wrong?

4 Focus on the continuous improvement of their international competitiveness through the development of the appropriate Human Resources skills Change management - a basic factor of adaptation of enterprise in conditions of external environment and markets, that impose also the conditions of competition What we aim to is upgrade the HR knowledge, skills and competencies with regards to extroversion for the enhancement of the companies’ international competitiveness What needs to be done – Companies

5 “Support of Human Resources of SMEs in Extroversion Issues”

Focus on the continuous improvement of their international competitiveness through the development of the appropriate Human Resources skills Change management - a basic factor of adaptation of enterprise in conditions of external environment and markets, that impose also the conditions of competition Strengthening Human Resources SME issues Extroversion To bind the "limits" of Greece? Entrepreneurship has "no limits". Become Extrovert, through the Program for the Support of Human Resources of SMEs regarding issues of Extroversion, implemented by the Hellenic Management Association (HMA), under the Operational Programme "Human Resources Development".

Program Description The program covers the following two actions: Action 1 "Counselling and Mentoring in Extroversion issues". The objective of Action 1 is to inform participants about theories and techniques that will help: To increase their understanding regarding the business internationalization process. To have, at any time at their disposal, a quick export readiness assessment tool of their business. Acquire a framework for the programming of the export operations of their business. Facilitate to take operational decisions on practical issues extroversion.

The Advisory will run for 22 hours per person and will be subsidized with € 5 (gross) per hour. Action 2 "Training to develop the skills of HR of SMEs in Extroversion issues". Action 2 relates to training to develop skills of business workers to create a considerable manpower reserve, expertise and technical issues extroversion benefit businesses and the economy. The training will last 40 hours and will be subsidized with € 5 (gross) per hour. SEVE implements together with EEDE the “Operational Programme Human Resources Development 2007 – 2013 a learning program for the enhancement of the Greek extroversion, competitiveness and innovation” in cooperation with SEV. Program goals: -Identify, develop and systematically promote policies and practices for the enhancement of extroversion, entrepreneurship and innovation to the working population -Create a relevant corporate education to entrepreneurs, employees and new graduates What we aim to is upgrade the HR knowledge, skills and competencies with regards to extroversion for the enhancement of the companies’ international competitiveness

Source: NBG GREECE Greek export performance Current account and trade balance trends 9

Greek export performance Exports of goods as % GDP EZ-17 (2012) Source: Eurostat Even though Greece still lags far behind the Eurozone average in export performance, 14% contribution of exports of goods to the Greek GDP is a historical record for Greece (taking however into consideration the Greek recession and significant fall of the GDP) 10

Greek export performance Greek export composition per sector Source: Eurostat Exports as a share of total Greek exports (2012) Exports as a share of industry production (2009) Average Annual trend (2003/12) Food14,712,16,8 Drinks & Tobacco2,428,20,3 Non metalic products2,811,72,8 Chemicals & Plastics10,439,85,9 Oils and Fuels38,914,830,3 Wood & Paper1,29,44,4 Textiles & Clothing6,546,9-5,8 Basic metals10,744,010,8 Machinery & equiment6,839,23,8 Transport1,743,44,5 Other4,0-10,3 Best performing merchandise non oil export sectors are basic metals, food and chemicals & plastics Further improvements in cost competitiveness are essential to transform the productive landscape of the economy 11

Greek export performance Greek export composition per geographic region Source: Eurostat Until 2010: EU preserves a constant high share of Greek exports : The geographical diversification of exports of goods begins, due to the proximity (eg. Turkey), combined with the rising wealth of the emerging economies 12

B.1 Markets We focus our analysis on 6+2 markets 6 developing economies Brazil China India South Korea Russia Turkey +2 developed economies USA Japan Export specialization 13

B.1 Markets Economic Analysis of trade flows. Greek exports to key target markets in 2003 and 2012 Export specialization Increasing importance of the target markets, as within 10 years, from 2003 to 2012, Greek exports to the 6 developing economies grew from 7% to 15% Looking solely on 2012, Greek exports to Brazil rose by 101% (!), in South Korea by 71% and in Japan by 44%, from the previous year Source: Eurostat 14

B.1 Markets Development of Greek exports between to 6+2 target markets, the EU-27 and the rest of the world Export specialization The big rise from 2010 and onwards to the 6 developing target economies is mostly due to mineral fuels in Turkey. However, still the trend is on the strong rise Source: Eurostat 15

B.1 Markets Why Brazil? Export specialization 7 th strongest economy in the world (GDP $ 2,3 trillion) GDP per capita raised almost 50% from 2004 ($ 8.100) till now ($ ) In 2010, the industrial production was increased by 11,5% and in 2011 remained stable 22th bigger import economy (more than $ 220 billion) Why China? The 2nd strongest economy in the world (GDP $ 11,5 trillion) Real GDP growth 2012: 9.4% 1st place in foreign reserves in the world ($ 3,2 trillion) 1st place in FDI inflow Industrial production growth of 13.9% The 2nd largest importing economy in the world.In 2012 China’s imports were$ 1,75 trillion 16

B.1 Markets Why India? Export specialization The 3rd largest economy in the world (GDP $ 4.5 trillion) Low unemployment rate: 9.8% 14th place in FDI inflow One of the major importing economies. In 2012 India’s imports were $ 488 billion Why South Korea? 12 th strongest economy in the world (GDP $ 1,57 trillion) GDP per capita almost doubled in last 10 years (from $ in 2002, to $ in 2012) Industrial production raised by 12.1% in 2010 and 3.8% in

B.1 Markets Why Russia? Export specialization The 6th largest economy in the world (GDP $ 2.4 trillion) 4th place in reserve assets: $ 500 billion One of the major importing economies. Russia’s imports in 2012 were $ 315 billion Why Turkey? 16th largest economy in the world (GDP $ 1 trillion) Real GDP growth in 2012 was estimated at 8.5% Industrial production growth: 9.2% 18

B.1 Markets Why USA? Export specialization The strongest economy in the world (GDP $ 15.3 trillion) One of the highest per capita GDP in the world ($ 49,000) The country obtains $ 148 billion in foreign reserves The biggest importer in the world. In 2012, USA’s imports were $ 2.2 trillion 10th place in economic freedom index Why Japan? 4th largest economy in the world (GDP $ 4.5 trillion) 2nd place in foreign reserves in the world ($ 1.26 trillion) 4th largest import economy imports. In 2012, Japan’s imports were $ 885 billion The country obtains the 3 rd higher life expectancy rate in the world (84 years) 19

B.2 Sectors Building on the EXPORT SUMMIT I presentation, we focus our analysis on 10 Greek sectors & products, which have RCA>1 for the period , when compared to the OECD countries. Export specialization RCA>1 means that for the certain period, this sector/ product has comparative advantage in international markets to another market (s) Source: Eurostat, author’s calculations 20

B.3 Export Specialization Ratio (RCAsp) Very often the RCA index can be also be interpreted as the export specialization ratio. This, a light modification of the simple RCA index is made to allow us to focus on a particular market (s). RCAsp is calculated as follows: Export specialization Similar to the RCA, RCAsp>1 reveals a comparative advantage of product j in market k, while if RCAsp<1 reveals comparative disadvantage in market k. 21

B.3 Export Specialization Ratio (RCAsp) Data We used export data for Greece and import data for the 6+2 target economies The analysis employed sectoral data under the HS2 classification Data source: International Trade Center (ITC) Relative EU import share for Greece = share of target market’s imports from Greece/ share of target market’s imports from the EU Note. The analysis of every sector included only the products with RCA>1 during the period internationally. The rest of the products with RCA<1 were left behind. Export specialization 22

C.1 Non processed leather, leather & fur RCA ( ) = 10,80 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil27,4227,3-14,50,0 China2,881,26,64,10,6 India10,345,27,90,0 S.Korea5,633,40,01,43,9 Russia16,50-13,628,529,028,1 Turkey4,315,7-0,48,810,0 USA29,980,8-2,80,80,9 Japan21,442,9-2,00,10,5 Greek non processed leather, leather & fur have comparative advantage in all target markets However, in Brazil, USA and Japan RCAsp is very high, but Greek exports too small in size Russia, China and India are growing markets in this sector. Greece up today has only exploited its comparative advantage in fur only in the Russian market. The rest remain unexploited Source: ITC, author’s calculations 23

C.2 Animal or vegetable fats & oils RCA ( ) = 7,30 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 5,71-8,720,70,30,6 China 3,16-6,216,42,25,0 India 1,24-1,316,40,20,8 S.Korea 8,88-8,514,40,10,5 Russia 3,514,47,61,62,3 Turkey 3,24-6,714,20,76,1 USA 11,59-13,414,53,22,1 Japan 11,52-6,38,90,61,3 Greek animal/ vegetable fats and oils enjoy comparative advantage in all target markets All target markets show growing demand in animal fats & oils during the last decade. Brazil displays the highest annual import increase (20,7%). However, Greece exports only 0,3% of its production in animal fats & oils in Brazil Except for Russia, there is a falling trend in Greece comparative advantage in every market over the decade Source: ITC, author’s calculations 24

C.3 Prepared food, beverages, tobacco RCA ( ) = 3,38 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 11,33-5,819,10,10,3 China 25,44-10,624,30,2 India 44,85-7,826,90,10,3 S.Korea 8,84-2,39,00,41,1 Russia 2,205,28,72,81,3 Turkey 14,24-2,611,41,00,7 USA 4,74-4,55,76,61,2 Japan 3,25-2,46,40,70,4 Very high RCAsp are recorded in India, China, Turkey and Brazil, much higher than the average RCA (3,38). Greek exports of prepared food, beverages & tobacco are nearly zero in these markets, while demand over the decade is steadily growing Preparations of fruit & vegetables and tobacco are the products that record the higher RCAsp in India at a product level Source: ITC, author’s calculations 25

C.4 Clothing RCA ( ) = 2,46 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 5,90-17,321,20,00,1 China 5,09-8,99,14,84,6 India 12,86-4,910,00,00,1 S.Korea 5,12-10,86,80,10,6 Russia 4,08-17,824,51,10,9 Turkey 2,49-10,38,114,617,4 USA 2,02-10,81,2 0,5 Japan 2,13-11,54,91,51,1 Except for China and Turkey, Greek clothing exports to the other target markets are very little in 2012 At a product level, cotton and articles of knitted apparel show high RCAsp. Cotton in the USA, India and Japan and knitted apparel in India and China Source: ITC, author’s calculations 26

C.5 Non metallic minerals RCA ( ) = 2,02 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 4,01-3,917,02,13,8 China 6,43-5,017,217,08,7 India 3,90-6,425,30,71,8 S.Korea 4,720,36,50,42,4 Russia 3,36-4,520,11,51,7 Turkey 6,16-3,412,53,05,6 USA 5,29-0,41,68,64,9 Japan 5,180,43,60,31,1 Greece is very active in marble-cement-suphur etc exports in China, taking advantage of its comparative advantage in the market. The same occurs for the USA Still there are a lot of glowing market opportunities in all target economies to develop Source: ITC, author’s calculations 27

C.6 Mineral fuels RCA ( ) = 1,90 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 0,8319,218,90,40,0 China 1,149,428,20,80,2 India 0,4318,125,10,00,2 S.Korea 0,5014,617,41,03,9 Russia 10,1828,612,40,0 Turkey 0,7015,718,420,333,1 USA 0,8216,09,93,30,2 Japan 0,5015,014,10,04,9 Apart from Russia, Greece has no comparative advantage in the rest of the target countries. However, we export 20,3% of our mineral fuels to Turkey. Source: ITC, author’s calculations 28

C.7 Live animals, animal products RCA ( ) = 1,71 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 6,17-2,920,00,0 China 8,510,514,80,00,1 India 122,804,616,20,00,3 S.Korea 4,843,76,70,10,8 Russia 2,40-0,219,01,71,1 Turkey 31,43-0,413,10,11,6 USA 5,782,02,83,94,6 Japan 1,955,72,00,41,0 A very high RCAsp is estimated for Greek exports of fisheries in the market of India (122,80), but in 2012 Greece exports 0,0% of fisheries in this market We are doing well in the USA, in fisheries and dairy products, having achieved a higher relative share in the market, compared to the EU average. Nevertheless, there are still many opportunities hidden in the emerging markets Source: ITC, author’s calculations 29

C.8 Vegetables & fresh fruits RCA ( ) = 1,65 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 2,016,4%8,20,0 China 2,60-6,9%22,60,10,5 India 4,484,3%15,20,10,7 S.Korea 3,28-0,8%10,20,10,5 Russia 1,43-0,4%17,99,67,4 Turkey 3,48-0,1%11,53,47,3 USA 5,04-5,2%9,30,6 Japan 1,931,8%4,80,1 Growing demand is estimated in all the target economies during the past decade Greece has comparative advantage in all markets exporting vegetables & fresh fruits There is a higher relative EU import share for Greece in Russia and Turkey, which consist traditional markets for the Greek fresh vegetables & fruits Source: ITC, author’s calculations 30

C.9 Basic metals RCA ( ) = 1,24 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 2,88-4,820,00,2 China 2,51-4,618,62,40,6 India 4,45-4,124,30,91,1 S.Korea 2,52-4,213,30,10,2 Russia 3,12-1,918,80,90,7 Turkey 2,57-4,916,25,74,8 USA 3,50-4,47,67,72,3 Japan 4,17-0,66,50,10,5 Aluminum is the product with the highest RCAsp in the sector, especially in Brazil and China Greece is active in the US, Turkey and China, while in the rest of the markets, Greek exports have just started to grow Source: ITC, author’s calculations 31

C.10 Chemicals & Plastics RCA ( ) = 1,19 RCAsp results RCAsp ( ) Average annual RCAsp trend ( ) % Average annual import trend ( ) % exports as a share of total Greek exports to the country (2012) % Relative EU import share for Greece (2012) % Brazil 1,10-3,016,50,10,0 China 2,09-1,113,20,40,1 India 3,02-6,125,60,1 S.Korea 3,27-3,411,10,10,0 Russia 1,22-3,219,11,50,6 Turkey 1,31-2,011,58,12,1 USA 2,37-5,17,10,80,1 Japan 2,99-5,911,30,1 As in the former sectors, there is growing demand, falling trend in the RCAsp through the decade Greece enjoys comparative advantage in all the target economies, while the country is yet active only in Turkey and Russia Source: ITC, author’s calculations 32

Opportunities for the internationalization of European SMEs (2011) European Commission Directorate-General for Enterprise and Industry Figure: Co-ordination of internationalization support for SMEs Discussion 33

Overall recommendations: internationalization support at an EU level Raising the profile of support for internationalization is required within the context established by Europe The overall policy should be practically supported and built on what already exists, at some point To support the internationalization of Greek SMEs and achieve a sustainable export driven growth, Greek exporters need a National Moderator, from the private sector, to maximize the relevance and optimize the coordination of all national attempts for extroversion support Discussion 34

SEVE’s proposal to: -Task Force -Ministry of Development and Competitiveness -Regions of Macedonia and Thrace -Greek banks -Greek Business Associations -Greek enterprises Discussion 35

Thank you for your attention 36