The world is becoming a smaller place and many people believe that it will not be long before the borders of trade will no longer exist. For the global consumer this is a positive move but there are drawbacks to this. With the arrival of sellers from all over the globe, local industry comes directly into competition with the international industry. Although some say that this will bring local industry in line with international industry, many local companies and businesses feel as though they are in danger of extinction due to this change.
Production costs can differ greatly from one place to another and if businesses come into direct competition with one another than the business that is able to produce their products at a lower cost whilst making a higher profit will be the one that survives.
Regulators have many thoughts on ways to protect the local industry as listed below:-
1) Import tariffs – An option is given to the local industry to request tariffs be applied to any imports on products or services. This will then bring the costs of the international industry level with the local industry. However the transport costs for international industry will sometimes naturally brings these costs levels without the aid of the tariffs.
2) Subsidies – Local industry can be granted subsidies to enable them to grow and strengthen to enable them to be in competition with the international industry. However this is not effective in the long term and is usually considered to be fair for those industries that are in their infancy or already weak.
3) Barriers raised – Barriers on entry can be raised by the trade council by enforcing global standards. This would ensure that all products must meet and conform to standards to enable products or services to be sold in Cyprus. This would mean that the quality of the product would improve but so would the cost of the product to the end user.
4) USP for local products – A need for local products can be created by local industry which creates a unique selling point and will become a specialised market. This would mean that the local product could not be replaced by international industry.
5) Join forces – Local industry can find ways in which to partner international industry to ensure that everyone makes a profit. Many local industries are choosing to outsource some if not most of their function so that they will eventually make more profit.
There is a good side to global competition as it works to safe guard the local consumer by minimizing the possibility of a monopoly within the local industry. The local industry needs to direct their efforts into maximising their profitability as long as there are no unfair trading practices.