New Paths, New Opportunities for SMEs

One classic dilemma for SME owners is often the question whether and at what point a company should expand abroad. This is a tricky question with no hard and fast rules as it depends very much of the circumstances of the individual entrepreneur. Before rushing in, you need detailed knowledge of the respective market and a logistical setup which meets both the market conditions and the requirements of the respective product.

Success Through Expansion
Sure – you need to think this through carefully before going global but don’t be too hesitant or afraid. After all, studies have shown that SMEs with cross-border activities are more successful than those that only concentrate on their home market. For instance, a recent study conducted by the European Union has shown that these companies create more jobs and are more innovative. Another survey forecasts that the number of companies generating as much as 40 percent of their revenue from international business will increase by 36 percent over the next three years.

In particular, the so-called BRIC countries continue to be attractive markets even though the pace of economic growth has slowed down. It is worth taking a look at Europe as well, despite the economic crisis. According to information provided by the financial service provider GE Capital, the services and financial sectors in the UK, France, Germany and Italy represent the growth markets of the future. The German market in particular remains an attractive choice for companies looking to expand in view of its size, stable political and economic environment and its excellent infrastructure in the heart of Europe. Conscious of this continued strength in Germany, FedEx has opened more than 30 new stations in Germany over the past two years – almost tripling its number of locations.

At the end of the day, of course, there are many issues that companies need to consider when expanding abroad. In my opinion, the three most important issues are as follows: entrepreneurs should conduct an in-depth market analysis to find out if there is a demand for their product or service in the respective market. Moreover, it is essential to become familiar with cultural characteristics and the language of the country, which can be of particular advantage when establishing a network of partners. The third and often very decisive aspect is to have a good knowledge of the national systems of administration.

A study by the European Union shows that many small and medium-sized companies rank customs regulations and formalities as being among the most complicated directives within the EU. This chimes with my own experience. It is often the customs regulations of other countries that serve as a barrier to expanding into new markets. Despite efforts to standardize customs procedures, there are still enormous differences around the world. In industrialized countries, for instance, goods can spend an average of ten days awaiting customs clearance. At the borders of developing nations, this can sometimes take around a month. Companies must be familiar with national and regional specifications and differences with regard to the import and export of goods.

Despite what looks like a fairly complex world of customs procedures, assistance can be easily requested by experts such as FedEx. We deliver to 220 countries around the world and provide companies with daily assistance for overcoming the challenge of national customs regulations. We prepare all of the documents required for cross-border trade and register the goods we are sending with the respective customs authorities, among other things. This typically has the effect of speeding up the delivery process. If needed, we also help to plan and implement the entire logistics chain.

Often it is a mix of both courage and know-how that drive and SME towards success. An example of a company in the UK FedEx advised on import and export is Bremont which sells British luxury watches around the world. The company was founded by two young brothers and is based in Henley-on-Thames. First we had discussions with the company’s founders, on topics such as the company’s core markets, the time frames required by retailers and the geographical distribution of suppliers. We then took this as a basis to develop an effective logistics chain. We are pleased to report that Bremont now employs more than 40 people and has opened its second store – in Hong Kong.

I makes me feel extremely proud that I was able to contribute to such an impressive business success and look forward to FedEx supporting many more such entrepreneurs as they embark on new paths and seize new opportunities in the future.