DIGI Comunications

Canceling the funding of exporters for participating in international fairs and exhibitions: What do we learn from this and what is to be done

Valentin M. Ionescu
English Section / 26 februarie

Valentin M. Ionescu

Starting from the negative performance of some projects for organizing the participation of Romanian companies in international fairs, the Minister of Economy decided to stop their financing. As the public has by now learned for some time, the Minister of Economy gave two examples that would support his decision. However, no assessment has been made public to find out what happened in those fairs in the previous years and see if there was a phenomenon of corruption that is reflected in a constantly poor organization, or if it was just a few isolated cases of underperformance. It should be emphasized that the money for participation in international fairs and exhibitions is managed exclusively by the Ministry of Economy.

On the other side, the National Association of Romanian Exporters and Importers (ANEIR), established in 1996, about which there is not much official information, but which is present everywhere, including in the export council, claims that the Minister of Economy "canceled the financing of both the Export promotion program (regulated by GEO 120/2002), as well as of the internationalization program of companies (regulated by GEO 8/2017) and that "the damages of this sabotage are immense: decrease of exports, unemployment, increase of the trade deficit and the balance of payments etc ".

According to the provisions of annex no. 1 to GEO no. 102/2002, the export promotion program includes the partial or integral financing for six distinct measures: a) participation in international fairs and exhibitions; b) organization of economic missions and actions to promote exports abroad; c) the partial bearing of the expenses for the organization and functioning of the Romanian commercial subsidiaries; d) conducting market and product studies; e) publishing and distributing abroad the information bulletins regarding the export offer, through the Romanian Foreign Trade Center; f) publicity and advertising actions of a general character, across products and product groups, on markets of interest for the Romanian exporters, through the Romanian Foreign Trade Center.

From the information we have, the Minister of the Economy canceled the measure to subsidize the participation in international fairs and exhibitions but not the others, while the ANEIR claims that the entire export promotion program has been stopped, as well as the program to support the internationalization of Romanian economic operators which ended in 2020, but which could have been extended, by amending GEO no. 8/2017.

Internationally, all industrialized states financially support export promotion programs, including through the participation of companies in international fairs and exhibitions, without anyone having to worry about spending taxpayers' money as such, as an investment in exports means jobs at home, profit and development. This means that such a program is supported, and is periodically measured to check efficiency and effectiveness. If negative quantities appear in the data (Data Development Analysis or Stochastic Frontier Analysis) or in the results or impact indicators, the program is adjusted but not canceled. I do not think that the cancellation of the program for participation in international fairs and exhibitions was based on the factors I mentioned above. Why is interest in supporting Romanian companies at fairs necessary?

I will be taking Germany's case, a country where the economy is based on exports, to see how it has been organized and what results it gets. It is a relevant case. In Germany there is an economic developmnent agency (Germany Trade & Invest/ Gesellschaft der Bundesrepublik Deutschland fur Außenwirtschaft und Standortmarketing) which handles foreign trade policies and local marketing. The Agency is under the authority of the Federal Ministry of Economic Affairs and Energy. This agency also has functions in providing advice to foreign investors. In promoting exports, the agency has experts in 50 branches around the world which analyze markets and prepare regular reports. Export promotion also has a marketing component that supports German companies, as well as the German economy in order to persuade foreign investors to come to Germany.

The federal government through this agency, the ministry, as well as through the Länder financially supports German companies at exhibitions in the country and abroad. The support is financial, technical and organizational. On the side of service providers for the organization of fairs and exhibitions there is a national association since 1907 which includes companies specializing in the organization of fairs and exhibitions (AUMA- Verband der Deutschen Messewirtschaft). There is also a German Fair Industry Institute that offers specialized training for education, training and research.

For the German authorities and AUMA, the fairs have three functions: a) establishing and maintaining business relations; b) a side effect for the HORECA industry, transport, trade, support services for the participants in the exhibitions; c) social function (jobs, knowledge transfer).

In Germany, between 160-180 national and international fairs are organized annually, respectively two thirds of the total number of fairs worldwide. The turnover at the fairs is 14.5 billion euros / year, and the effect on the German economy is 28 billion euros / year, with 58 thousand companies active in the fair organization segment, and 230 thousand jobs generated.

On the other hand, the German authorities ensure participation in 320 international fairs for German companies (150 thousand), this being one of the ways to increase exports, especially for small and medium-sized companies, as large ones generally have other channels of promotion.

Romania does not have a trade fair industry, but it can learn from the German model the policies for promoting exports organization plus process management to support participation in national and international trade fairs. Therefore, what the Ministry of Economy lacks is a clear concept of policy in the field of export promotion, respectively a measurable objective accompanied by policy measures and organization to facilitate the achievement of the objective. On the other hand, funding is low and negatively affects the organization. The whole policy should be reviewed. Therefore, export promotion does not start with the cancellation of financing, but with attention, patience, competence and intelligence.

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