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| The Politics of Marketing |
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The good news: The marketing consulting (Livui Shivuki) program is alive and well — operating, accepting, and approving new applicants. The bad news: the proposed government budget eliminiates the Fund for the Encouragement of Export Marketing (Keren Idud l'Shivuk l'Hul) completely. Managing Director Steve Rhodes sent this letter to Finance Minister Benjamin Netanyahu on the proposed elimination of this important fund.
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Add Your Voice
Many Trendlines' clients have received funding from Keren idud or the Livui programs. Not only are these programs among the most supportive for young companies, but they are vital to building Israel's business infrastructure because they address a great weakness of Israel's business strategy —marketing.
Steve sent copies of this letter to the Minister of Industry and Trade, Ehud Olmert (fax number: 02-624-3738) and others.
We encourage you to write letters, send faxes, and make phone calls to make your voice heard.
Read our other articles about the Fund:
Yes, there's more money for exporters
There's money for exporters
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The Honorable Benjamin Netanyahu
Minister of Finance
Facsimile: 02-563-5769
Re: The Fund for the Encouragement of Export Marketing
Dear Minister Netanyahu,
It was with great disappointment that I read of the Finance Ministry's proposal to eliminate the activities of the Fund for the Encouragement of Export Marketing. My disappointment was compounded with not a small sense of the surreal when I read the reasoning behind this decision.
For years, the Fund has supported young export companies with a variety of programs that not only supported their marketing activities, but far more importantly taught this important skill to the Israeli entrepreneur. As you well know, having the best product is rarely sufficient for commercial success; at least as important is knowing how to bring the product to market, and doing so. In fact, in recent years the venture capital community has often stated that the two most important conditions for success are marketing and management, not technology.
The argument to support the cut, as stated in the budget, is that the Fund represents only a miniscule fraction of value of the country's total exports. This may be factually correctly but is deeply flawed at the conceptual level. The vast bulk of the country's exports today are concentrated into the hands of a small number of large companies that certainly do not require any government subsidies of their ongoing marketing expenses. These are not the companies that most need the Fund.
The companies that need the Fund are those for whom the current economic situation is most difficult — early-stage companies struggling with a lack of venture funding in the market, with a worldwide recession, and with a difficult security situation that complicates their export efforts. These are the companies that most need the Fund, and those that will be most harmed by its elimination.
While these young companies may not generate most of the country's exports today, it is a fact that, historically, small businesses create more new jobs than large businesses and that they represent the future of the country.
I fully understand and support the need to cut budgets, but our current system of corporate welfare that subsidizes the largest and wealthiest companies is a total misallocation of funds. In 2002, two companies — Teva and ECI — received Chief Scientist grants totaling NIS 151 million, far more than the total budget of the Export Marketing Fund. It is completely beyond comprehension why the state is funding development at Teva, which has a current market cap of approximately $10 billion. (The grant to Teva of NIS 44 million represents approximately 0.4% of the company's 2002 sales — eliminating grants to such giants would have no impact on their performance.) Other grants were paid to the likes of Motorola, Rad, Applied Materials (market cap $23.5 billion).
Subsidizing the development efforts of companies like Teva and Applied Materials, while denying sorely needed export marketing funds to Israeli start-ups, is unconscionable. I urgently request that you re-examine the issue of government support of our export industries in order to assure a steady stream of new, innovative companies that can compete in world markets and thereby create jobs and capital for the nation. Programs that support the export marketing efforts of small business must not be cut — they should be increased.
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Sincerely yours,
Steve Rhodes
Managing Director
The Trendlines Group
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The Trendletter team welcomes your comments.
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