Commercial diplomacy

Commercial diplomacy is diplomacy that focuses on development of business between two countries.[1] It aims at generating commercial gains in the form of trade and inward and outward investment by means of business and entrepreneurship promotion and facilitation activities in the host country.[2] Commercial Diplomacy is pursued with the goal of gaining economic stability, welfare, or competitive advantage.[3]

In literature the concepts of economic diplomacy and commercial diplomacy are often used interchangeably.[3] Definitions of both concepts vary, and consequently the relationship between them is also described differently. Some authors argue that commercial diplomacy is a subset of economic diplomacy.[4] It is certain, however, that both kinds of diplomacy are "irrevocably intertwined" and thus "distinct [but] obviously closely related to [each other]".[5]

Purpose

Commercial Diplomacy emphasizes the government's role, being defined as "a government service to the business community, which aims at the development of socially beneficial international business ventures".[6][7] It is "the work of diplomatic missions in support of the home country's business and finance sectors and includes the promotion of inward and outward investment, as well as trade".[8] Commercial Diplomacy thus includes "all aspects of business support and promotion" including investment, tourism, R&D, and intellectual property.[9]

Commercial Diplomacy is designed to influence foreign government policy and regulatory decisions that affect global trade, investment and commerce. It is concerned with government regulations and actions that affect international commerce—including standards in areas such as health, safety, the environment, and consumer protection; regulations covering services such as banking, telecommunications and accounting; competition policy and laws concerning bribery and corruption; agricultural support programs; and industrial subsidies. Potter (2004) argues that Commercial Diplomacy is a value-creating activity due to its usefulness in dealing with managerial and government concerns.

In this context, Commercial Diplomacy is profitable in that it makes exporting and operating abroad easier; it is a valuable instrument for export promotion and operating abroad; it enables companies to perform tasks abroad more quickly and increases the amount of exports and company results by providing information about rules, regulations, culture, public tenders and the market of the host country; by providing support during the partner search; and by providing assistance in trade disputes, fairs, and missions. Especially for companies that have financial limitations, access to reliable information and a broad network abroad are essential.[10][11]

Activities

Traditional Commercial diplomatic activities include facilitating, negotiating, promoting and arbitrating international trade, investment, intellectual property and commerce, and advocating Responsible Commercial Diplomacy (RCD). Also, networking, capacity building, intelligence, image campaigns and support. These activities are shown in the table below.

Network activitiesIntelligenceImage campaignsSupport
Developing business and government contactsGathering and disseminating commercial informationPromoting goods and servicesIn negotiations; contract implementation and problem-solving
State visitsMarket researchParticipating in trade fairs, introducing potential exportersGathering export marketing data
Buyer-seller meetingsReporting to home countrySensitizing potential foreign investorsSupervision of violations of IPRs and contracts
Match-makingConsultant to both countriesGathering export marketing dataAdvocacy
Search for partners, distributors, investors, lawyersImage studies, joint scientific researchTourism promotionCoordination of legal action
Personal networkAwareness campaigns

Other activities for Commercial Diplomacy and rationales that companies need are: need for access to reliable and neutral business information; credibility and image support in foreign markets; partner search; conflict handling; support of home country delegations (state missions); strategic concerns (e.g., energy).[12]

See also

References
  1. Naray, O. (2008). "Commercial Diplomacy: A Conceptual Overview." Conference paper for the 7th World Conference of TPOs – The Hague, The Netherlands.
  2. Ruel, H. J. M. and Visser, R. (2012). "Commercial Diplomats as corporate entrepreneurs: explaining role behavior from an institutional perspective", International Journal of Diplomacy and Economy.
  3. Reuvers, S. and Ruel, H. J. M., "Research on Commercial Diplomacy: Review and Implications" in Commercial Diplomacy and International Business: a conceptual and empirical exploration, Ruel, H. J. M., ed. (Advanced series in Management, Emerald, 2012).
  4. Okano-Heijmans, M., and Ruel, H. (2011). "Commerciële diplomatie en internationaal ondernemen: Koopman versus dominee in de nieuwe economische wereldorde", International Spectator, 65(9), 463-467.
  5. Berridge, G. J., A Dictionary of Diplomacy (Basingstoke: Palgrave, 2001): p. 128.
  6. Kotabe, M., and Czinkota, M. R. (1992). "State government promotion of manufacturing exports: A gap analysis", Journal of International Business Studies, 23(4), 637-658.
  7. Naray, O. (2010). "Commercial Diplomats in the Context of International Business", The Hague Journal of Diplomacy, 6, 121-148.
  8. Ozdem, M. I. (2009). Government Agencies in Commercial Diplomacy: Seeking the Optimal Agency Structure for Foreign Trade Policy. North Carolina State University, p. 8.
  9. Naray, O. (2010). "What a good Commercial Diplomat has to know and be capable of", Exchange: The Magazine for International Business and Diplomacy, 2 (December 2010): 8-9.
  10. Busschers, S. (2012). "The Value of Commercial Diplomacy from an International Entrepreneurs perspective", in Commercial Diplomacy and International Business: a conceptual and empirical exploration, Ruel, H. J. M., ed. (Advanced series in Management, Emerald, 2012).
  11. Potter, E. H. (2004). "Branding Canada: The Renaissance of Canada's Commercial Diplomacy", International Studies Perspectives, 5, 55-60.
  12. Kostecki, M., and Naray, O. (2007). Commercial Diplomacy and international business (Den Haag: Nederlands Instituut voor Internationale Betrekkingen Clingendael, April 2007): p. 41.


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