Expanding beyond EU borders still presents small and medium-sized enterprises (SMEs) with obstacles, but the potential rewards of internationalisation for their growth are significant. The European Commission has therefore put forward a strategy to help European SMEs seize global opportunities by streamlining and strengthening support available for them.
Businesses that internationalise their operations through exports, foreign partnerships, investments and cross-border clustering are more likely to create new jobs and enjoy growth, enhanced competitiveness and long-term sustainability. This has made the internationalisation of SMEs, which created around 80% of all new jobs over the past five years and employ more than 90 million in Europe, an EU priority.
Encouraging SMEs to internationalise is closely tied to the objectives of the Small Business Act and its Review, according to which supporting these businesses is crucial to creating more jobs. Indeed, a 2009 study financed by the European Commission found that internationally active SMEs reported a growth in employment of 7% versus only 1% for SMEs without any international activities. Similarly, 26% of internationally active SMEs introduced products or services that were new for their sector in their country, while for other SMEs, this was only 8%.
While the evidence to support internationalisation is abundant, many SMEs encounter significant obstacles to expanding their operations outside the EU. One factor is that SMEs must deal with complex issues, such as compliance with foreign laws, customs rules and protecting intellectual or industrial property rights, which can be daunting for entrepreneurs who may not be equipped with in-house expertise. As a result, while 25% of SMEs have developed their activities in other countries within the Internal Market at some point during the last three years according to the Report of the Study on the Opportunities for the Internationalisation of European SMEs only about 13% of SMEs are active in markets outside the EU.
On the basis of these findings, the European Commission recently published a Communication entitled ‘Small Business, Big World – a new partnership to help SMEs seize global opportunities’. The objectives of this strategy are primarily to identify gaps in the current SME support network, address these in a cost-efficient way and thereby help these businesses to expand outside the EU.
"Major non-EU markets with strong growth rates represent significant opportunities for EU small enterprises,” said Antonio Tajani, European Commission Vice-President in charge of Industry and Entrepreneurship. “SMEs are Europe's main economic strength. To help them to better exploit their potential in the global arena is a clear priority to boost competitiveness and create employment."
In fact, the strategy sets out six specific fields of action: mapping and strengthening existing support services; creating a single virtual gateway to information for SMEs; making support schemes at EU level more consistent; promoting clusters and networks for SME internationalisation; rationalising new activities in priority markets; and leveraging existing EU external policies.
Stakeholders have been closely involved in shaping the new strategy. An online consultation, which ran until 12 July, helped gather stakeholder feedback on the Commission’s proposals, which then fed directly into the formulation of the Communication. The consultation was also an effective means of sounding out the expectations of stakeholders – such as chambers of commerce and trade-promotion agencies – and the general public regarding the role of the EU in supporting internationalisation. For example, while support does exist at the national and regional level, the consultation helped to identify certain gaps, and underlined the need to provide SMEs with adequate services in this domain, wherever they are located in the EU.
In order to map existing support services effectively, the European Commission plans to launch an analysis to identify possible gaps and overlaps. This will provide the basis for assessing the need for any further action. The European Commission also intends to promote collaboration through Market Access Teams in EU Delegations and Member States’ national authorities among existing publicly funded service providers.
Thanks to its 600 local partners in 50 countries, the Enterprise Europe Network, provides SMEs with an opportunity to establish direct contact on the ground and to receive professional support services right on their doorstep. To strengthen this tool, which is financed under the EU Competitiveness and Innovation framework Programme, the European Commission plans to give the Network a new governance structure, and will launch a multilingual online portal in 2012 to provide third-country and sector-specific information about priority markets to complement existing services at the national level. An awareness-raising campaign will also be launched to familiarise SMEs with available support services.
Making support schemes at the EU level more consistent by facilitating cross-border co-operation is another priority, and the European Commission aims to achieve this through financial incentives. Training programmes for entrepreneurs will also be financed to enable entrepreneurs and small business managers to navigate internationalisation operations. In addition, cross-border co-operation between clusters networks will be supported through lending backed by EU guarantees.
Contact points for SMEs will be established in the trade and economic sections of all relevant EU Delegations, as part of the work of Market Access Teams. Furthermore, the SME Finance Forum on Africa has been established, which represents an important first step in building bridges between European and African businesses through strengthened and permanent dialogue. The impact of autonomous tariff suspensions and quotas on SMEs will be assessed as part of an evaluation to be launched in 2012.
The EU has established a number of successful measures to support the internationalisation of SMEs. For example, EU business centres have been established in India and China to help SMEs to enter third-country markets, in line with the principles set out in the Small Business Act. The IPR Help Desk in China, which has been operational for the past three years, continues to provide a crucial service in delivering targeted advice on intellectual property rights to SMEs.
A German producer, for example, recently discovered imitations of one of its products for sale on the internet. Attempts to stop the infringement with cease & desist letters were ineffective, so the China IPR SME Helpdesk assisted this company in completely reviewing its IPR strategy. Unfortunately, the firm had not registered a single right in China or in Europe. Prompted by Helpdesk suggestions, the German producer registered much of its IP, and was eventually able to launch a raid, in co-operation with Chinese authorities, that resulted in the seizure of counterfeit goods from the infringing company.
The Enterprise Europe Network, which helps European SMEs to find business and technology partners and apply for EU funding, now links over 3 000 experts in 50 countries. A Scottish company, which set its sights on Turkey as a destination for its water-treatment, hygiene and environmental-care products, needed support to help bridge the business culture gap. The Network was able to line up a three-day programme of interviews in Turkey, which eventually resulted in five commercial and technical agreements and the opening of an office in the country.
The European Commission has also established a number of SME policy dialogues, both bilaterally (China, Russia) and multilaterally (EU-MED Cooperation, Eastern Partnership). These dialogues are aimed at helping SMEs get a toehold in often complicated foreign markets. Finally, as a result of the 2007 Market Access Strategy for European exporters, Market Access Teams now operate in 30 key export markets, bringing together trade councillors and EU business organisations to discuss trade barriers and ways of tackling them.
‘International Affairs’ Unit
Directorate-General for Enterprise and Industry