SERVICE EXPORTS
Service industries span a wide variety of enterprises from
hamburgers to high technology. The service sector accounts
for about 70 percent of the U.S. GNP and 75 percent of
employment. In 1988, the service sector also accounted for
slightly more than two-thirds of all self-employed persons.
Internationally, a similar change has taken place. World
trade in services grew in the past decade at an average
rate of 5 percent a year to constitute approximately 20
percent of overall world trade today. In some countries,
the share is much higher. Spain reports a 39 percent share;
Austria, 36 percent. The leading exporter of services, the
United States, shows services accounting for 18 percent of
all merchandise and services trade and, unlike the
situation with trade in goods, has had a surplus in
services trade for decades.
The income generated and the jobs created through the sale
of services abroad are just as important to the U.S.
economy as income and jobs resulting from the production
and export of goods. In view of the shift toward services
both domestically and internationally and the substantial
competitive advantage of the United States in the services
field, those who have services to offer can become major
participants in world trade.
TYPICAL SERVICE EXPORTS
The service sector accounts for a great share of the U.S.
economy, although some services are not easily exported. It
would be very difficult to export most personal services,
such as the service performed by waiters in restaurants;
but most business services can be exported _ especially
those highly innovative, specialized, or technologically
advanced services that are efficiently performed in the
United States. The following sectors have particularly high
export potential:
- Construction, design, and engineering. The vast
experience and technological leadership of the U.S.
construction industry, as well as special skills in
operations, maintenance, and management, frequently
give U.S. firms a competitive edge in international
projects. Some U.S. firms with expertise in
specialized fields, such as electric power utilities,
also export related construction, design, and
engineering services, such as power plant design
services.
- Banking and financial services. U.S. financial
institutions are very competitive internationally,
particularly when offering account management, credit
card operations, collection management, and other
services they have pioneered.
- Insurance services. U.S. insurers offer valuable
services ranging from underwriting and risk evaluation
to insurance operations and management contracts in
the international marketplace.
- Legal and accounting services. Firms in this field
typically aid other U.S. firms operating abroad
through their international legal and accounting
activities. They also use their experience to serve
foreign firms in their business operations.
- Computer and data services. The U.S. computer services
and data industries lead the world in marketing new
technologies and enjoy a competitive advantage in
computer operations, data manipulation, and data
transmission.
- Teaching services. The vast U.S. education sector
offers substantial new services for foreign
purchasers, particularly in areas such as management,
motivation, and the teaching of operational,
managerial, and theoretical issues.
- Management consulting services. Organizations and
business enterprises all over the world look to the
United States in the field of management. U.S.
management consulting firms as well as other U.S.
firms that are willing to sell their particular
management skills find great potential overseas for
export of their services.
EXPORT SERVICES VERSUS PRODUCTS
There are many obvious differences between services and
products. Consequently, important features differentiate
exporting services from exporting products:
- Services are less tangible than products, providing
little in terms of samples that can be seen by the
potential foreign buyer. Consequently, communicating
a service offer is much more difficult than
communicating a product offer. For example, brochures
or catalogs explaining services often must show a
proxy for the service. A construction company, for
instance, can show a picture of a construction site,
but a picture of the finished building communicates
the actual performance of the service more
effectively. Much more attention must be paid to
translating the intangibility of a service into a
tangible and saleable offer.
- The intangibility of services also makes financing
more difficult. Frequently, even financial
institutions with international experience are less
willing to provide financial support for service
exports than for product exports, because the value of
services is more difficult to monitor. Customer
complaints and difficulties in receiving payments can
also appear more troublesome to assess.
- Services are often more time dependent than products.
Quite frequently, a service can be offered only at a
specific time, and as time passes, the service
perishes if it is not used. For example, to offer data
transmission through special telephone lines may
require providing an open telephone line. If this line
is not heavily used, the cost of maintaining it may
not be covered.
- Selling services is also more personal than selling
products, because it quite often requires direct
involvement with the customer. This involvement
demands greater cultural sensitivity when services are
being provided, since a buffer of indirect
communication and interaction does not exist.
- Services are much more difficult to standardize than
products. Service activities must frequently be
tailored to the specific needs of the buyer. This need
for adaptation often necessitates the service client's
direct participation and cooperation in the service
delivery.
Demand for certain services can derive from product
exports. Many of our merchandise exports would not take
place if they were not supported by service activities such
as banking, insurance, and transportation. Services can be
crucial in stimulating product export and are a critical
factor in maintaining such exports. However, in such cases,
services follow products rather than taking the lead over
them.
MARKETING SERVICES ABROAD
Since service exports are often delivered in the support of
product exports, a sensible approach for some beginning
exporters is to follow the path of relevant product
exports. For years, many large accounting and banking firms
have exported by following their major multinational
clients abroad and continuing to assist them in their
international activities. Smaller service exporters who
cooperate closely with manufacturing firms can also
determine where these manufacturing firms are operating
internationally and aim to provide service support for
these manufacturers abroad.
For service providers whose activities are independent from
products, a different strategy is needed. These individuals
and firms should search for market situations abroad that
are similar to the domestic market.
Many opportunities derive from understanding the process
and stage of development of relevant trade activities
abroad. Just as U.S. society has undergone change, foreign
societies are subject to changing economic trends. If, for
example, new transportation services are opened up in a
country, an expert in the area of containerization may
offer services to improve the efficiency of the new system.
Leads for service activities can also be gathered by
staying informed about international projects sponsored by
organizations such as the World Bank, the Caribbean
Development Bank, the Inter-American Development Bank, the
UN, and the World Health Organization. Very frequently,
such projects are in need of service support.
The Eximbank has introduced a new program to assist U.S.
design, engineering, and architectural firms with foreign
contracts. For information on this program, contact the
Eximbank's Engineering Division (202-566-8802).
