By Daniel Hunter
Small and medium sized businesses (SMEs) across Europe are not taking full advantage of export opportunities, according to a survey commissioned by UPS of more than 8,000 SME owners or directors across seven countries.
The vast majority of shipments sent by surveyed SMEs are destined for domestic customers and other countries within the EU, and the findings suggest that these businesses need help to explore markets further afield. Concerns over goods being lost or damaged and a lack of information about how to manage export regulations and procedures are curbing the appetite for this export expansion.
“There is huge potential for European SMEs to export outside the European Union,” said Cindy Miller, president, UPS Europe. “In a competitive global business climate, SMEs have to take advantage of these opportunities to expand their customer base abroad, increase their revenues, and create sustained growth.”
According to the research, Italy, Germany, and France have the largest number of exporting SMEs. SMEs in Belgium, the UK, and the Netherlands are the most advanced exporters in reaching markets beyond the EU, as they are most likely to be shipping more packages outside of the EU compared to the other countries surveyed.
Risk and Regulation: Export Concerns are Top-of-Mind
Between 51 and 81% of SMEs surveyed predict their exporting activity will remain static over the next 12 months. SMEs in the UK and Germany are more optimistic than in other countries, with more than 40% of current exporters expecting to increase exports within the year. Would-be exporters are reticent to begin sending goods abroad, with all major respondents — with the exception of Poland and Italy, where there was some optimism — reporting that they are not very likely or extremely unlikely to start exporting in the near future.
While the research shows that in both the UK and Germany exporting is seen as the “logical next step” to growth, potential risks are top-of-mind. SMEs in all markets say that the risk of goods being lost or damaged is a major barrier to exporting within the EU. Moreover, export regulations, procedures, onerous administrative requirements and costs were ranked the top barriers to exporting to the US. Across the seven markets, micro-sized businesses tend to have the greatest concerns about all exporting risks, suggesting they need a higher level of support compared to their small and medium-sized counterparts.
Many exporters have little knowledge of the TTIP (Transatlantic Trade and Investment Partnership) — a trade agreement being negotiated by the EU and US that could remove tariff barriers and cut customs red tape — and how it could help them expand into the US market. Awareness and understanding of the agreement is low across all markets surveyed, on average 21% or less. Exporters in Germany have the greatest awareness of the TTIP at 47%, but respondents indicated they were unsure of the impact that the TTIP is likely to have.
“There is a real need to help SMEs on both sides of the Atlantic understand the benefits of the TTIP,” concludes Miller. “Small businesses are convinced that larger businesses will benefit most from the TTIP, and they’re not fully aware of the benefit this agreement could bring. Logistics companies like UPS have an important role to play in helping SMEs understand the TTIP’s potential. Also, as a seasoned provider with a worldwide delivery network and reliable customs brokerage expertise, UPS can help ensure that these companies have access to the vital services and support they need to look beyond the horizon and take full advantage of export growth.”
The study — European SME Exporting Insights — surveyed small and medium-sized business owners or directors from 8,144 SMEs in seven major European markets (the UK, Germany, Italy, the Netherlands, France, Poland, and Belgium) across the automotive, healthcare, high tech, industrial and retail sectors. It examined motivations for exporting and identified key barriers and anxieties that SMEs face while selling goods internationally.
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