Mid-market firms could unlock billions in revenues by increasing exports
KUWAIT: Mid-market enterprises (MMEs) could take advantage of huge opportunities from international trade, according to Hidden Impact: Unlocking the Growth Potential of Mid-Market Enterprises 2017, a new report recently launched by HSBC. In fact, exports currently account for only 15 percent of MMEs’ revenues.
HSBC Commercial Banking, in conjunction with Oxford Economics, explored the views of 1,400 MME senior executives in 14 countries in addition to in-depth economic analysis. The findings reveal more leaders are focusing their growth strategies on domestic markets (18 percent) rather than international expansion (11 percent). Only 3 percent expect global operations will contribute to their business’ financial performance in the next three years. This is despite domestic market volatility (55 percent) being their top concern. Regulatory changes (52 percent) and skills shortages (50 percent) were also identified as key concerns that are tempering MME growth appetites.
MMEs are the backbone of the economy, making significant contribution to growth and employment. It is estimated that the 433,000 MME companies across 14 countries covered by this study directly employed 208 million people - equivalent to the population of Brazil - and support $3.4 trillion in exports. It is estimated that in just two years the direct contribution of MMEs to global GDP increased by 9 percent and the number of jobs they support grew by 3 percent.
Contribution of MMEs to economic growth in the Middle East, North Africa and Turkey (MENAT) region have been evident in domestic markets as well as through the cross border expansion of their businesses. Continuous investment in transport connectivity, ports as well as investor-friendly free trade zones constantly increase the opportunities to find new trade partners, and grow export and import lines.
Steven Cranwell, Regional Head of Commercial Banking, HSBC MENAT said: “We have seen a number of MMEs expanding their businesses beyond the GCC in the recent years. Many have done this through diversifying their business lines or acquiring businesses in other markets. In addition, within the region, diversification of nonoil revenue streams is a major priority for governments, coupled with structural reforms. As a result, there have been an increasing number of growth opportunities for domestic and international MMEs across sectors such as tourism, healthcare, construction and infrastructure. These opportunities will only grow as countries successfully progress with their transformation agendas. HSBC is committed to working closely with businesses to help them reap the benefits of international commerce, and just as importantly, raise their profile as major economic contributors to the local economies.” Half of all MMEs are estimated to be in China; a further quarter in India but per capita they have a larger profile in countries like Singapore, the UAE, Canada and Germany.
In our sample, the MME sector makes the most important contribution to local employment in United States (20 percent of market sector employment) and the UK (18 percent of market sector employment), while their share of local GDP is highest in the USA, followed by Mexico, the UAE, Australia and Canada.