International trade and cooperation has become a key driver of small business success according to a DHL Express study conducted between September and November 2012.
The survey, which covered about 410 small medium enterprise (SME) directors in a several economies, reveals that SMEs that engage in international markets are twice as likely to be successful than those that only operate domestically.
Of the SMEs surveyed, 26 percent of the companies that were trading internationally significantly outperformed their market, in contrast to 13 percent of those with operations only in their home country.
SMEs cited the key benefits of this international approach as the access to new markets that it provides them with as well as access to know-how and technology and diversification of their products or services.
The results ring true for SMEs within Africa, which are increasingly being recognised as drivers of economic growth on continent. While no verified data is available around the number of SMEs operating on the continent, they make up over 90 percent of formalised business within countries such as Ghana and South Africa, and are an important area of development within Malawi.
In an e-mail on Friday, DHL Express Malawi commercial manager Grace Chirwa said small businesses in the country should use the opportunities available to access international markets.
“The possibilities opened up by new technologies, the Internet, and modern transportation means that there are many foreign trade opportunities out there for Malawi businesses. With thorough research and a well-defined strategy, local SMEs can successfully expand into new markets, compete with larger companies, and use their size and nimbleness to their own advantage,” said Chirwa.
The research also reveals an increasing pace of globalisation and a sharper international focus among smaller businesses, with SMEs that were founded in the last five years more likely to have international business operations than older SMEs despite having had less time to grow their businesses. The research notes that, significantly, the majority of SMEs who had outperformed their markets over the last three years indicated that they also planned to increase the percentage of exports in their turnover over the next three years despite the uncertain economic environment.
The report, however, highlights that inadequate business infrastructure, which is a case for Malawi, is constraining competitiveness by reducing business efficiency and that SMEs are having to work harder to overcome infrastructure inefficiencies, particularly compared to larger companies with greater resource. SMEs biggest concerns relating to international trade are a lack of available information on foreign markets, high custom duties and the difficulty of establishing contacts with foreign partners and an overseas customer base. Most of the better-performing SMEs identified in the study employ over 50 people, underscoring the importance of resource in overcoming barriers to international growth.
In a statement, DHL Express chief executive officer appreciates the hurdles that SMEs meet in accessing international markets.
“There are clearly still some hurdles that remain for small businesses with global aspirations, but we are delighted to see that more and more SMEs are looking at the fantastic opportunity that international trade represents,” said Ken Allen.