Digitized Businesses Enjoy Lower Trade Costs, Faster Transactions: Report

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A full digitalization of commerce could lead to a six-fold increase in the number of business that export goods according to a newly-released report. Image courtesy "Future of Trade" report.

By Leila Hatoum

Digitizing businesses across the world could help as many as 350 million more businesses export their goods and services for the first time through digital commerce, which would add up to $29 trillion to the digital economy in the next 10 years, according to specialists quoted in “Future of Trade” report.

“The full digitalization of commerce could lead to a six-fold increase in the number of business that export goods. This could mean between 100 million to 350 million businesses would become engaged in global export trade for the first time,” said the report which is the result of cumulative work between Dubai Multi Commodities Center, (DMCC), the Center for Economics and Business Research, (Cebr), and U.K.’s leading economics consultancy  firm Futureagenda.org.

Such a digital revolution would give a significant boost to worldwide trade,  which currently sees $40 trillion worth of goods make their way along constantly shifting trade routes around the world every year, according to the Future of Trade report, which shares insight of 150 specialists from five continents.

This is significant, as currently only one in five businesses, across the world exports its goods and services. But if businesses were to adopt a full digital strategy, the cost of exporting could drop by as much as 85 percent. That could have a significant impact on exporting and the level of trade flows. It also means that poorer countries could benefit from such an opportunity going forward, and would be able to have a share in global trade through e-commerce.

Emerging regions have understood the importance of online commerce, the report finds, and have started to gain ground when it comes to this next technological level.

“The share of mobile shoppers of internet users is highest in the emerging markets of Asia-Pacific, Latin America, [the] Middle East and Africa, and substantially lower in Europe or North America. This can partly be explained by the fact that there is more of a level-playing field between emerging and developed markets when it comes to technologies such as mobile payments,” the study says.

As the number of Internet users grew exponentially over the past two decades, with nearly half of the world’s population now an internet user, the digitalization of business too can grow.

However, there is still a long way to go until the world is fully digitalized, states the report.

“Companies that want to succeed in today’s challenging marketplace must adopt a robust digital strategy, think globally and embrace change. If the world of global trade collaborates around these maxims, we will all surely benefit,” says Gautam Sashittal, DMCC’s chief executive officer.

Covering trade patterns over the next decade, the report also highlights the underlying issue of change in economic power, which creates uncertainty with regard to how new alliances may play out. Countries and regions such as China and India are on the rise, while Europe is on the decline. But with a digitized business, such alliances fall, and transactions find new virtual routes worldwide.

Meanwhile, with nearly 42 percent of all businesses being digitized today, a new index has been launched by DMCC and Cebr to provide a real-time picture of digital progress in global trade. The Industry Digitalization Index, (IDI), will track the progress of change across geographies and sectors.

“Research such as DMCC’s ‘The Future of Trade’ provides actionable insights for businesses in a time when trade routes are re-balanced by new technologies and increasing global connectivity,” says Ahmed Bin Sulayem, Executive Chairman, DMCC, which is the hub for over 11,500 companies that attracts billions of dollars in foreign direct investment a year, to and through Dubai.

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