Internationally focused small and medium enterprises are twice as likely to be successful asthose only operating domestically, and newer SMEs – particularly from emerging economies – are
increasingly turning to exports to expand their businesses, according to a study commissioned byDHL Express.The survey by IHS of 410 SME companies in G7 and ‘BRICM’ economies revealed that internationaltrade and cooperation has become a key driver of success, although ‘20th century infrastructure’,high customs duties and an information gap on international trade continue to present stumblingblocks, particularly for smaller SMEs.
A spokesman for DHL Express told CEP-Research that the company was increasing its focus in 2013on supporting SMEs – which account for around 70% of DHL Express’s revenues and are growing at afaster rate than its customer base as a whole.
Of the SMEs surveyed, 26% of the companies that were trading internationally significantlyoutperformed their market, in contrast to only 13% of those with operations only in their homecountry. SMEs cited the key benefits of this international approach as the access to new marketsthat it provides them with, as well as access to know-how and technology, and diversification oftheir products or services.
The research also reveals an increasing pace of globalisation and a sharper international focusamong smaller businesses, with SMEs that were founded in the last five years more likely to haveinternational business operations than older SMEs, despite having had less time to grow theirbusinesses. Significantly, the majority of SMEs who had out-performed their markets over the lastthree years indicated that they also planned to increase the percentage of exports in theirturnover over the next three years, despite the uncertain economic environment.
The report highlights that inadequate business infrastructure is constraining competitiveness byreducing business efficiency, and that SMEs are having to work harder to overcome infrastructureinefficiencies, particularly compared to larger companies with greater resources. SMEs’ biggestconcerns relating to international trade are a lack of available information on foreign markets,high customs duties and the difficulty of establishing contacts with foreign partners and anoverseas customer base.
Most of the better-performing SMEs identified in the study employ more than 50 people,underscoring the importance of resources in overcoming barriers to international growth.
The research also reveals that ‘developed-world’ SMEs are lagging behind emerging-market SMEs interms of the internationalisation of their businesses. It suggests this is a function of thedeveloped world still boasting significantly higher consumption per capita than emerging markets,which incentivises BRICM (Brazil, Russia, India, China and Mexico) SMEs to do businessinternationally – which “does suggest that G7 SMEs face a major challenge to develop theirinternational operations as the balance of power inevitably shifts eastwards”.
Significantly, BRICM SMEs placed more emphasis on logistics as a positive influence on theirinternational operations than their G7 counterparts, suggesting that they rely more on efficienttransportation and customs processes to overcome infrastructure obstacles, but also that they seelogistics services as a competitive differentiator for their business.
Ken Allen, CEO, DHL Express, commented: “The strong correlation between improved businessperformance and cross-border trade suggests that there is a clear benefit for SMEs in going global.Our raison d’être as a global logistics company is to make this process more efficient, and we willcontinue to tailor our services and solutions to help SMEs grow and compete in the globalvillage.”
DHL Express said efforts to support SMEs included the development of the company’s suite ofonline products. The spokesman added: “The study highlighted some of the challenges this customergroup faces, such as high customs duties, a lack of knowledge of international markets, and thedifficulty of establishing contacts with foreign partners and an overseas customer base. We canhelp with the latter two of these challenges, for example through customer consultations andthrough the Small-Business Portal on our website, where businesses can access advice, and help withdocumentation.”
He highlighted the fact that logistics was perceived as a competitive differentiator in BRICMcountries. “There is an opportunity for companies like ours to use logistics creatively to supportthese businesses,” he said. “In developed economies, it is more a case of giving efficiencies,whereas in the BRICM countries there are a lot of opportunities to add value.
“So this is a high priority for our management. We have built up this network now and althoughwe are a big company, we can support SMEs that want to grow internationally.”
