SMEs lead battle to boost EU exports

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An increasing amount of help and advice is given to European companies that wish to sell their goods and services in emerging markets such as China and India, where renewable energy and green technologies are seen as major areas for growth.

Encouraging European businesses to grow by expanding their activities is seen as vital for the success of the 'Europe 2020' strategy, adopted by EU leaders last year, which aims to promote "smart, sustainable and inclusive growth".

In this framework, the European Union seeks to provide support for companies, especially small and medium-sized enterprises (SMEs), that are interested in developing commercial activities in fast-growing markets such as Brazil, Russia, India, China and South Korea (the so-called 'BRICK' countries).

Antonio Tajani, the EU commissioner for industry and entrepreneurship, recently highlighted the importance of helping European SMEs to operate in China and India, in particular.

"Internationally active SMEs yield better results," said Tajani, who noted that SMEs with international activities are able to expand and create jobs more quickly than those only serving customers in their own domestic markets.

"Establishing business centres in both China and India is therefore extremely beneficial for enterprises because there they can find strong support helping them to enhance their competitiveness and become more sustainable in the long term," said the commissioner.

The Commission is currently preparing proposals for an EU strategy on supporting SMEs in international markets, which should be published by the end of this year.

Special help for European SMEs in China

Small companies wishing to develop their activities in China can get help from the EU Centre for Support to European SMEs, based in Beijing, which was established towards the end of last year. It provides information, advice and training for EU companies wanting to export to or invest in the Chinese market.

Funded by the European Commission, the 'EU SME centre' helps European SMEs establish their activities in China by providing information and assistance on company registration forms, employment contracts and certificates for technical standards.

When it comes to India, the European Union is taking a different approach by funding the European Business and Technology Centre (EBTC), established in partnership with Eurochambres, the European association of chambers of commerce and industry.

The EBTC, which started operations in Delhi three years ago and has now three additional regional offices (Bombay, Bangalore and Calcutta), helps European companies to identify business opportunities, deal with the Indian authorities, find partners and set up projects.

Bringing green technologies to India

According to Poul V. Jensen, director of the EBTC, the centre has a particular focus on four sectors: biotechnology, energy, the environment and transport. He said that the most important single area of activity was probably solar energy.

Developing cooperation between European and Indian companies is seen as a means of transferring new technologies, expertise and know-how in these fields, which are crucial for limiting CO2 emissions in the context of global efforts to tackle climate change.

"There is a recognition that a lot of these technologies are embedded with SMEs which might face a bit more of a difficult time than multi-national companies in entering a market like India," said Jensen.

Jensen notes that these so-called "sunrise sectors" could be financially interesting for European companies, because growth rates in certain market segments are much higher that those found in the EU, or even other sectors of the Indian economy.

Massive growth in imports from China

Looking at trade in both goods and services, the European Union imports more from China than from any other country in the world (around €295 billion per year). However, the total amount of exports from the EU to China is less than half this amount (around €130 billion per year). The EU's trade deficit with China is currently running at around €160 billion per year, more  than double the size of the deficit with Russia and Japan together.

According to the latest data published by Eurostat, exports of goods from the European Union to China grew by 37% last year, from €82 billion to €113 billion, while imports of goods from China to the EU increased 32%, from €214 billion to a massive €282 billion.

Meanwhile, the European Union's trade with India is much more evenly balanced. The EU currently exports more goods and services to India (around €43 billion per year) than India does to the EU (some €40 billion per year). The volume of trade in goods between the two grew by 28% between 2009 and 2010.

India is currently the EU's sixth most important trading partner after the USA, China, Russia, Turkey and Japan. Following close behind are Brazil, South Korea, Canada and Taiwan.

Most Europeans troubled by China's rise

Europeans are increasingly concerned about the growing economic power of China, according to the results of a survey published this week (27 March) by the BBC World Service.

The survey found that 57% of Italians have a negative perception of China's growing economic power (compared to 47% when the same question was asked in 2005). 

Most Europeans also believe that China is not fair in the way it trades with other countries. A majority of people in France (59%), Germany (56%) and Italy (51%) hold this opinion, according to the results of the survey, which was carried out in 27 countries by Globescan/PIPA.

The British appear to be less worried by China's resurgence, with only 41% of people in the UK seeing it negatively, although this is up from just 34% in 2005. Meanwhile, 44% of Britons believe that China's trade practices are unfair.

Doug Miller, chairman of GlobeScan, commented: "China's 'economic miracle' is more controversial today than it was in 2005. Ravaged by the Great Recession, citizens of G7 countries may be less certain how they will compete with China, now so large in their economic lives."

Many EU member states provide support to companies, including SMEs, that wish to expand their activities by exporting their goods and services to emerging markets. EURACTIV's network gave specific examples from six countries:

Bulgaria

The Bulgarian executive agency for SMEs has a project which aims to encourage the internationalisation of Bulgarian enterprises. This project includes several actions, including the development of an Internet portal and database for exporters, promotional events in Bulgaria and abroad (with representatives from China and India), workshops and seminars, and support for the participation of Bulgarian enterprises in international exhibitions.

Czech Republic

The government of Petr Ne?as (Czech prime minister since June 2010) identified as an economic priority an active and comprehensive policy to encourage exports.

Czech companies can turn to the Ministry of Industry and Trade to get important information about planned fairs and exhibitions, or on trade barriers in foreign countries. Czech exporters can also use a network of 'CzechTrade' offices, which provide practical assistance, including translation services, and help with finding business partners.

France

The government’s 'France Export' programme works with more than 1,000 French companies and is focusing this year on developing exports to India. In previous years, the programme has focused on China, Brazil and Russia.

According to official trade statistics, the value of exports from small and medium-sized enterprises represents 38% of all French exports (in 2010). Overall French exports to Asian markets increased by 5% in 2010, with some 9,000 companies exporting goods and services to customers in China.

Hungary

The Hungarian government has introduced a wide range of measures to support exports by SMEs. The newly established National Office for the Foreign Economy supports SMEs' exports by identifying opportunities abroad, organising business meetings for Hungarian entrepreneurs, and gathering and distributing information about the tenders available in Hungary and in the EU.

Agencies for export credit and export insurance, run by the Hungarian Development Bank, also provide services to boost SME exports. Hungary maintains a network of professional diplomats in 45 countries (including China and India) to encourage the internationalisation of companies.

Slovakia

The Slovak government has a strategy to develop exports by supporting the competitiveness of Slovak companies on international markets. Specific activities include participation in fairs and exhibitions, such as the World Expo 2010 in Shanghai.

From May 2009 to October 2010 the National Agency for the Development of SMEs (NADSME) implemented the Global Education of Entrepreneurs project. It aimed to help SMEs to overcome prejudices towards developing countries and to understand their business opportunities in India, China, Africa, Central Asia and the Balkans.

According to the latest official data, exports from small, medium-sized and micro enterprises account for around 39% of all Slovak exports.

Spain

Support for SMEs that wish to export outside Europe comes mainly from two sources: the Spanish Institute for Foreign Trade (ICEX) and the Commerce Chambers Network (CCN).

The CCN has developed more than 900 commercial missions and agreements with other international networks. This network and the ICEX participate in 'Plan China', a strategy which has been developed with the Chinese Council for the Promotion of Investment and Trade.

In 2009, Spain participated in the Sixth Chinese International Small and Medium Enterprises Fair (CISMEF). The Spanish Embassy in China has opened an Economic and Commercial Office, and SMEs can also get help from the Spanish-Chinese Foundation.

(All information collected by EURACTIV's network.)

The Small Business Act adopted by European leaders in 2008 explicitly commits the EU and its member states to helping SMEs benefit from the growth of emerging markets in other parts of the world.

The SBA says Europe should provide "market-specific support and business training activities" for smaller businesses, and calls for the setting up of 'European Business Centres' in countries such as China and India.

The Enterprise Europe Network (EEN), which provides support services for SMEs in the EU, also helps businesses to expand into new markets. It has partners in 21 non-EU countries.

European SMEs have consistently complained that they find it difficult to break into some foreign markets due to the legal, linguistic and cultural complexities of doing business overseas.

Protectionism has also become a growing problem since the outbreak of the financial crisis, with governments making it difficult for foreign firms to access public procurement contracts and economic stimulus funding.

  • End 2011: European Commission expected to publish proposals for EU strategy on supporting SMEs in international markets.

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