Definition of Trade Association: Function, Purpose, and Examples

Trade association definition – Trade associations are made up of businesses in a particular field and they work to make or push legislation and inform companies on various topics and information related to their industry.

Let’s learn more about the definition of a trade association, and learn how trade associations find clients. Also, learn about the importance of several trade association activities such as holding trade meetings, volunteering, or participating in committees or publications in this Sinaumedia article!

What Is a Trade Association?

A trade association is generally a group of experts who come together to promote common interests and participate in public relations activities such as advertising, education, political donations, lobbying and publishing. However, their main focus is collaboration between companies or standardization.

Trade associations are based on a particular type of business, type of product or product. They may also be called industry trade groups, business associations, or sector associations and may act at the international, national, or regional level. Not only that, trade associations can be funded by business groups, industry or even the government.

About Trade Associations

Trade associations, also known as trade organizations, are voluntary associations of business enterprises organized on a geographical or industrial basis to promote and develop commercial and industrial opportunities within their scope of operations.

Associations are also useful for publicly voicing members’ views on matters of common interest, or in some cases for exercising some measure of control over prices, output , and distribution channels.

According to Britannica, the oldest and most widespread trade organization is the chamber of commerce, also known as the commercial association, trade council, and development association. Although, in most countries, their focus is on developing business opportunities and enhancing community, in France the chamber of commerce has served as the formal administrative control body of a public commercial institution.

In 1599, the city of Marseille established the first chambre de commerce and empowered it to send consuls, embassies and commercial missions to certain countries. The modern French chamber has owned and managed the stock exchange section, bonded warehouses, general trading halls, and the facilities of harbours, wharves, inland waterways, and airstrips.

First, the English Chamber of Commerce: a voluntary association of independent companies in industry, trade and commerce organized in 1768 in Jersey, the Channel Islands, to protect and promote common local interests. Thereafter, many new chambers were formed, both in England and abroad as the economy progressed.

For example, in the state of New York in 1768, in Calcutta (Kolkata) in 1834, and in Paris in 1873. Today, many countries have chambers of commerce overseas, in cities around the world.

The only truly international organization is the International Chamber of Commerce, which was founded in 1919.

Trade associations organized by industry or product have a significant impact on prices, sales, output, and technology, although they rarely expand beyond national boundaries. In its modern form, these associations started in the late 19th century in many countries, including the United States, United Kingdom, and Japan, but they date back to 1821 in France.

Most trade associations limit themselves to voicing the views of their members on matters of common interest; particularly in the United States, this exercise includes legislative lobbying. In some countries, they may also have control over prices and production levels, but in countries with strong antitrust laws (eg, the United States) this type of organization is short-lived.

Separate employers’ organizations have been established in several countries, including the UK, Australia and India, to deal with employment issues. The French Industrial Federation, on the other hand, represents the interests of its members both as producers and as entrepreneurs.

Functions of Trade Associations

Trade associations are created with the aim of advancing the interests of traders and entrepreneurs. It is not surprising that this association must fulfill common interests that have various variations.

Matobers, here are some of the functions of trade associations in various factors and fields, namely:

1. Field of Public Policy and Advocacy

Trade associations were established one way or another so that employers, workers and the government can create a business climate that provides mutually agreed upon opportunities and results. Not to forget, its nature must also support.

2. Field of International Relations

The business climate in Indonesia requires fields that can expand networks and cooperation on an international scale, and present existing businesses in Indonesia to the world. This is the next function of trade associations.

3. Regional Organization and Empowerment

Trade associations also function to maintain industrial relations and the business climate, namely so that they run smoothly in a sustainable and also conducive manner.

4. SMEs, Women Entrepreneurs, and Social Affairs

The importance of trade associations is to create an innovative business climate for SMEs. The method is by increasing the entrepreneurial skills of SMEs managed by women entrepreneurs, Matobers.

In this way, they can be assisted in increasing professionalism, creating jobs, so that they have the ability to compete with other entrepreneurs in the business sector.

5. Human Resources

Human resources are also an aspect to be considered in terms of trade association functions. This can help economic growth with increased competitiveness among those who have businesses, as well as create jobs for Indonesians.

Trade Association Purpose

Of course, trade associations also don’t only have one goal. Certainly, various goals are made for the mutual benefit of its members who are business people. Following are some of the goals of trade associations:

1. Become a forum for communication between members

Trade associations aim to be a forum for dissemination of information and communication between business people in certain industries. The reason is, members of this association can hold a scale discussion or trade meetings to strengthen knowledge and resolve current issues.

2. Giving Political Influence

Before the government makes a policy, trade associations are one of the parties that will be listened to. At certain times, association attitudes can also be active in influencing certain policies or lobbying policy makers and laws.

3. Publication

Representing the voice of businesses to the public is another face of trade associations. Usually, the voice of this businessman is conveyed through interviews. Not only that, trade associations are also proactive in creating publications on certain issues, be it through association websites, newsletters, or releases to the media in order to reach the government and the public.

What this means for Members and Consumers

So, what does the existence of a trade association mean for its members and consumers? Let’s look at the review in the continuation below!

What does this mean for consumers?

The following are various things that consumers who subscribe to brands that are members of trade associations get:

1. Peace of mind

Using a member of an industry trade association can provide peace of mind. Many trade associations require their members to undergo a vetting process before joining and are monitored to ensure continued compliance. Trade association members are also frequently required to register and comply with a Code of Practice and minimum standards that must be met in rendering their services.

Associations also generally require companies to meet and maintain strong membership criteria covering aspects of their service including professional qualifications, service delivery and financial stability. All of its members are regularly audited to ensure standards are maintained.

Some trade associations also require their members to provide insurance guarantees to customers for long-term guarantees. This can give consumers peace of mind if something goes wrong or the original company ceases to exist.

2. Advice and help

Trade associations often have grievance procedures and can act as mediators between consumers and member companies to seek effective dispute resolution. This means the consumer has an avenue to seek advice in the first instance if something goes wrong.

These associations usually have a process whereby consumers can file technical complaints against members. The association will also offer mediation services and strive to reach an amicable resolution for both parties.

3. Professional services

Because trade association membership often requires a company to make financial commitments, undergo professional training, adhere to minimum standards, and so on, membership represents a conscious decision on behalf of the member company to demonstrate and prove its professionalism.

If the company is not a serious and credible company, it is less likely to invest time and resources in becoming a member of such an organization.

What does this mean for trade association members?

Matobers, here are the benefits of having a trade association for its members:

1. Technical and know-how support

Trade associations provide products and services to their members, including training and education materials, technical advice, conferences, networking and publications, industry standard update notices, and so on.

2. Shaping industry standards

Trade associations often undertake specific projects to benefit the industry as a whole, and members have the opportunity to get involved and directly influence outcomes. As technical specialists for an industry, trade associations are very often involved in reviewing and establishing standards and guidelines for their industry.

3. Member benefits

Member companies can often use a trade association logo to indicate to the public that they meet the membership criteria and are a bona fide member of that association.

Trade Association Benefits

1. Easy to Get Clients

Trade associations can gain clients by attending trade shows, through their website, or by e-mailing individuals in specific fields. By participating in trade shows, trade associations have the opportunity to recruit clients to join and gain extensive knowledge of their specialty. Materials should be created to help provide information to individuals about trade associations.

Most people will participate in a trade association by going directly to their website. Word of mouth is also a technique used to gain exposure. Trade associations can also get a list of individuals in different businesses and then email them asking them to join.

Let’s look at an example. An employee working in the hospitality industry may want to find out more about hospitality and networking in their field. The company they work for may suggest several trade associations to join, or they may search the Internet for different trade associations in the hospitality industry.

Going directly to the website will help inform potential clients about the purpose of the trade association and will allow them to fill out an application to join.

2. Holding Trade Meetings

Trade meetings help provide clients with information in the field and are a way for clients to network with one another. Trade shows help companies in the industry showcase their latest products or services. The trade show also has seminars on various topics in the field, such as training, job opportunities, technology and more. Meetings are also a way for businesses to come up with ideas for their company.

3. Volunteer

Volunteering is the basis of trade associations. Members of different organizations often voluntarily form committees to achieve different goals. Volunteers help shape various training programs and generate new ideas for trade associations.

They have volunteers in charge of marketing and social media to help build awareness for the organization. Many trade associations hire apprentices to gain experience in the field while contributing to the idea generation for the trade association.

Volunteers can be anyone from the CEO of a company to a low-level employee.

Example of a Trade Association

Furthermore, trade associations can also be interpreted as organizations with certain members such as business people, producers, and individuals. Matobers, here are some examples of trade associations in Indonesia so we can understand better:

  • AISI (Indonesian Motorcycle Industry Association): an association that aims to assist the development of the motorcycle business in Indonesia.
  • ASI (Indonesian Cement Association): promotes the industrial interests of each of its members
  • APPI (Association of Indonesian Fertilizer Producers): regulates the fertilizer industry in one organization based on the coordination of sound industrial principles.
  • IDEA (Indonesian E-Commerce Association and Indonesian e-commerce association): an association that functions as a meeting place for e-commerce industry players in Indonesia, so that they communicate with each other.
  • APJII (Association of Indonesian Internet Service Providers): an association that assists all its members in providing quality internet for the people of Indonesia.
  • ALI (Indonesian Logistics Association): an association that makes regulations on supply chain logistics management in Indonesia.

Entrepreneur Organization ( EO)

Apart from trade associations, we can also recognize other related terms, namely Entrepreneur Organizations or Entrepreneurs Organizations. As the world’s only peer-to-peer network exclusively for entrepreneurs, by entrepreneurs, the Employers’ Organization helps change the lives of those who can change the world.

With more than 16,500 diverse leaders in 60+ countries and growing, EO membership helps entrepreneurs reach their full potential through the life-enhancing power of connections, shared experiences, and collaborative learning. They are not for profit and are responsible for the investment of their members.

The EO community has been committed to helping each other succeed since 1987. Its members gain access to the world’s top experts, growing beyond their perceived limits, perfecting and realizing their goals in life, and in business.

In 2020, EO introduced a new look and brand identity that better reflects today’s community. At the same time, they examine and refine the goals, ambitions and values ​​of the organization, preserving what remains true and letting go of what no longer fits.

EO values ​​speak to who entrepreneurs are as an organization. They shape decision making, inspire teamwork, and guide messaging.

EO’s goal

The goal of the Entrepreneur Organization is to move the world forward by unlocking the full potential of entrepreneurs

EO’s ambition

Meanwhile, EO’s ambition is to enable transformational growth in the lives of its members.

Matobers, that’s an explanation regarding the meaning of trade associations and how they work. Hopefully all the discussion above is useful and can add to your insight.