Majority of small firms predict international trade will account for 50% of revenues by 2019
Businesses worldwide report infrastructure, political instability, admin costs and cultural differences as main barriers to entering new markets
The majority of small and medium businesses worldwide expect to generate up to 50% of their revenues internationally by 2019, according to a new study conducted by the Economic Intelligence Unit (EIU) on behalf of DHL Express.
The Breaking borders report, which surveyed 480 small and medium firms from 12 countries across 20 industries, also found that, despite international optimism about overseas trade, many companies still feel there are “severe obstacles” which stop them from entering new markets.
Overcoming different market environments was listed as the biggest hurdle with other key barriers to international growth including political instability, administration costs to establish a local presence, and cultural differences; 84% described the unfamiliarity of foreign markets as important to determining its attractiveness.
The survey also reflects a gap in international activity between small and medium companies in developed and developing countries – 69% of small firms in Germany, France, Italy, Japan, Canada, USA, and the UK (G7) currently trade internationally as opposed to 46% of businesses in Brazil, Russia, India, China and Mexico (BRICM).
In addition, small and medium enterprises from BRICM markets were found to be more likely to seek growth opportunities in other developing countries, while businesses from G7 economies are more active in other developed markets.
Africa was the one country viewed with reservation by many small businesses from both BRICM and G7; 40% of BRICM and G7 survey respondents stated that they saw no growth opportunities in the region at all.
China, on the other hand, remained the most attractive growth market with many businesses reporting the size of the market and the Chinese government’s economic policy having created “favourable conditions for growth”.
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DHL Express CEO, Ken Allen, commented: “Tapping into new markets is clearly still not easy for many small enterprises with growth ambitions, particularly for regions such as Africa that offer great promise for the future.
“With meticulous planning, a well-designed supply chain, a clear understanding of their competitive strengths and the right mindset, small and medium enterprises can break through any border and make the world their market.”