Challenges faced by SMEs venturing abroad
A series of articles published by the Economist Intelligence Unit, and sponsored by international audit and advisory group MAZARS, represented locally by MAZARS Malta, outline the major challenges facing SMEs venturing abroad for the first time.
Among the articles in the series, one finds an analysis of the facility with which mid-sized enterprises can quickly become global exporters online. This article points out, amongst others, that SMEs can also grow quickly by capitalising on new market niches in industries disrupted by technology. Another contribution in the series focuses on how legal and taxation issues can pose hurdles for SME exporters. These include the effect of opaque rules, the inconsistent application of regulations, as well as customs classification issues and variable VAT rules.
The series also features an article explaining how establishing a strong presence, and show- ing a long-term commitment to selected foreign markets, is key to long-term export growth for SMEs. In this respect, limiting the number of export markets helps keep growth manageable and sustainable. Logistics is tackled in another article, which outlines how this function can lead to successful market entry, while explaining how advanced information systems provide an edge in securing cost-effective logistics support. Moreover, it indicates how SMEs venturing abroad find the outsourcing of the logistics function particularly viable.
Finally, the series includes a study on how to sustain growth in new markets, showing how SMEs often adapt products—and sometimes business models—to local conditions, and partner with local market experts. Amongst others, it highlights that complementary skills, similar aims, and long-term commitments, should feature on the checklist of any SME looking to form international partnerships.
Commenting on the EIU articles and their implications, MAZARS Malta partner Alan Craig said that although the challenges for an SME operating in an unfamiliar environment are indeed daunting, this strategic alternative also offers tremendous potential. “The numerous hurdles for SMEs to surmount brings an initial element of reluctance for them to explore international markets. However, with a world that continues to become more digitalised and globalised, the benefits to reap are quickly beginning to outweigh the obstacles faced.” Craig explained that MAZARS’ partnership with the EIU was designed to help bring these issues to the fore, thereby also reflecting the firm’s commitment to provide support to its many SME clients. To download the full study, go to www.mazars.com.mt/Home/News/Surveys-Studies/Venturing-Abroad