Corporate Ownership & Control / Volume 8, Issue 1, Fall 2010, Continued - 4 463 THE EFECTIVENESS OF TRADE MAP AS TOOL FOR MEASURING THE TRADE POTENTIAL BETWEEN SOUTH AFRICA AND CHINA Cornelius. H. Bothma a *; Michael. C. Cant b Abstract Measuring the trade potential between two countries is an important task both for the national trade analyst as well as for the company researcher. Trade potential is commonly measured using the gravity model, an economic construct. The gravity model, however, is not a perfect model and has its detractors. More recently, the International Trade Centre developed Trade Map an online tool for analysing the trade flows between countries. Although not yet widely used, Trade Map appears to be to good alternative or complementary facility that can be used to measure trade potential. The purpose of this article is to report on the evaluation of Trade Map as a tool for measuring trade potential. In so doing, Trade Map was used to analyse the trade potential between South Africa and China. It was found that Trade Map can provide the international trade researcher with a rich width and depth of information on the trade potential between two countries. It is suggest that Trade Map should be used together with the gravity model to create a more complete analysis of trade potential [180/150] Keywords: trade potential, trademap, gravity model, trade analysis a Marketing and Retail department, University of South Africa, Pretoria, South Africa b Marketing and Retail department, University of South Africa, Pretoria, South Africa 1. Introduction A country‘s trade potential can be said to be a measure of the scope or capacity of that country to grow its bilateral trade (i.e. imports and exports) with another country or region. Examining the academic literature reveals that trade potential is most commonly measured using the gravity model – an econometric construct (Söderling, 2005; Rahman, Shadat & Das 2006; Armstrong 2007; Proença, Fontoura & Martínez-Galan 2008; De 2009; and Shepotylo 2009). The gravity model is based on the idea that gross trade volumes (exports, imports) between two countries depend on the sizes of the two countries in question measured by their respective GDPs, their respective populations, as well as on the distance between the two countries measured by both geographic and socio-cultural ‗distances‘ between the two countries (Zaroz & Lehmann 2003; and Leitão 2010). Although the gravity model is widely used as a measure of trade potential in the literature, there have been some reservations expressed about the model‘s theoretical foundations (Zaman 2001; and Armstrong 2007). Armstrong (2007), in particular, provides a lengthy discussion of the (mainly theoretical) shortcomings of this model. The author suggests that while the gravity model may be a useful tool to measure the potential for trade between two countries or regions and perhaps even to identify the most suitable countries to trade with, the model‘s main drawback from a practical perspective is that it provides no clarity on the nature of the potential trade between the two countries; for example, what products should be traded. This article suggests that there may be an alternative way to measure trade potential, namely by examining the existing trading patterns between two countries or regions in order to see what can be learnt from them. As the trade data that gives rise to trading patterns is available at a product level, such an analysis should highlight which products and product groups have the best chance of success. It is also possible to identify which countries offer the best chance for success given the products that are under investigation. It is argued that this method provides greater insight into and understanding of trade potential than what can be learnt from the gravity model. The study thus uses the United Nation‘s International Trade Centre‘s (ITC‘s) Trade Map facility to examine the existing trading patterns between South Africa and China with the aim of identifying areas with trade potential. Trade Map is an online, database-driven service run and maintained by the ITC that makes it possible to analyse the trading