By Claire West
By 2013, 40 per cent of the world's SMEs will be international, according to the latest HSBC Global Small Business Confidence Monitor. With 29 per cent of businesses already currently trading internationally, the next two years will see an acceleration of the trend to trade beyond borders.
In the UK, 20 per cent of SMEs are currently trading internationally and HSBC's data highlights the appetite to venture overseas. In the last year alone, HSBC's international trade finance lending to UK businesses was up 13 per cent with the export component up 43 per cent.
The bi-annual survey of more than 6,000 SMEs in 21 countries indicates an overall decline in business confidence in developed markets, with just 12 per cent forecasting an increase in local economic growth. However, emerging markets are experiencing a surge in business confidence, with 43 per cent of respondents in emerging markets predicting growth in their local economy over the next six months. This confidence can be attributed to increased private consumption, global re-stocking and liquidity from the West, all of which have helped boost the emerging markets on the global trade stage.
Noel Quinn, HSBC head of commercial banking, UK, said: "Some consider the fast growth in emerging markets a challenge to the UK supply chain, with companies increasingly seeking low cost products from overseas. In actual fact, we're seeing 'thinking' businesses approach this shift with optimism, using it as an opportunity to innovate and cash in on the creativity, strong heritage and knowledge-intensive base Britain is renowned for. Looking to the future, we see these markets driving a new wave of consumer and business investment demand, which will provide exciting export opportunities for businesses."
When asked about the greatest barriers to doing business overseas, the results between businesses already in International markets versus those in domestic only markets were significantly different:
* (33 per cent) of international UK businesses cited dealing with foreign currency as their biggest challenge.
* However 39% of businesses not yet undertaking international business cited lack of knowledge and international connections as the key barrier.
Noel Quinn concludes: "These results highlight the importance of seeking professional advice and carrying out thorough research before venturing into a new market. For many firms, international trade offers an opportunity to exploit their own strengths, diversify their customer base and expand their business, but it is not a step that should be taken lightly."