Time for small firms to start thinking global too?

HSBC reckons more and more SMEs are thinking about overseas trade. But how on earth are they going to access the local know-how?

by James Taylor
Last Updated: 19 Aug 2013
International trade is something many would view as a big company issue. But not so, according to HSBC: its latest Global Small Business Confidence Monitor has found that 29% of small firms are already trading beyond their home borders, and 40% expect to be doing so by 2013. The bank reckons emerging markets are the big opportunity for SMEs - not least because developed countries are feeling much glummer about their prospects. But can a small firm with relatively few resources really crack a difficult market like China or India?

The study, which surveyed 6,000 SMEs in 21 countries, found a big difference in confidence between developed and emerging markets: only 12% of firms in the former were expecting growth in their local economy during the next six months, compared to 43% of those in emerging markets. HSBC puts this down to increased private consumption, and money flowing in from the West as companies re-stock after the slowdown.

This might seem like bad news for SMEs. After all, doing business overseas is tough enough at the best of times: 39% of firms said lack of knowledge and connections was the biggest barrier to overseas trade, while 33% complained about currency problems. And emerging markets, by their very nature, are likely to be even more complicated.

However, HSBC thinks differently. Emerging markets are all set to drive 'a new wave of consumer and business investment demand', it reckons - and this means big export opportunities for UK business. In fact, it says that some 'thinking businesses' in the UK are already doing just that; it believes the UK can cash in by utilising its strengths in 'creativity, strong heritage and knowledge-intensive base'.

As we discussed yesterday, Britain has a lot of room for improvement when it comes to emerging markets. China, for instance, only bought £5bn of stuff from us in the whole of 2009 (the last year for which full figures are currently available), whereas it spent more than four times that in the US just this week.

The trouble is that for small firms, the barriers to entry will often seem insurmountable. Any bank worth their salt should be able to help them on the currency front. But finding those local connections that can help them understand how to go about getting their goods or services to market in the best possible way is another level of difficulty altogether. It’s a great excuse for a few fact-finding missions, mind…

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