With the downturn in the U.S. economy and a lull in its Internet-spurred growth, companies are racing to accelerate their pursuit of opportunities abroad. Recent International Data Corp. research shows that while $142 billion was spent on Internet commerce in the U.S. in 2000, the rest of the world spent nearly 75% of that figure, and the two numbers are quickly reaching parity.
Perhaps the most sensible place for U.S. companies to find b-to-b opportunities may be the borders north and especially south of us. At the Third Summit of the Americas on April 20 in Quebec, President Bush praised the proposed Free Trade Area of the Americas agreement. The accord would create the largest free trade zone on the planet, with a gross domestic product of $11 trillion, providing Latin American companies with access to the largest market in the world, and boosting sales of American goods and services south and north of the border.
To get a sense of the Free Trade Area of the Americas agreement's potential impact, consider the North American Free Trade Agreement. Since NAFTA took effect in 1994, it has helped triple Mexico's exports, 88% of which go to the United States. Similar results for the entire region are expected from the FTAA.
Latin American Internet usage is growing faster than anywhere else in the world—from 9.9 million users in 2000 to an estimated 40.8 million by 2004, a four-fold increase (according to eMarketer Inc.). By 2004, b-to-b transactions will generate 88% of e-commerce revenues in the Latin American region (said eMarketer Inc.) and b-to-b online spending will account for $76 billion in revenues (according to Forrester Research Inc.).
Future tariff reductions and the resulting interaction should only further encourage, if not force, many companies in Latin America to quickly adopt Internet-based approaches to improving business efficiency. The opportunity to share our American edge in technology and business applications could not be more timely.
Guy Nielsen is director-international marketing, KPMG Consulting Inc. He can be reached at [email protected]