A record number of SMEs are exporting to Asia and other developing regions
EKN report 2017: More and more businesses are taking advantage of export possibilities to developing markets. Asia is the largest developing region for small and medium-sized business exports. The past ten years have seen a 67 per cent increase in their exports to the Asian countries.
“It is gratifying knowing that in 2016, there were more small and medium-sized businesses exporting to the growing markets than ever before,” says Carl-Johan Karlsson, Head of Business Area, SME & Midcorp at EKN.
It is the fourth year in a row with record figures.It is important that Swedish exports continue to expand globally. Considering the strong development in Asia, the increase of exports to the region – 67 per cent in ten years – is also positive. The fact is that exports to Asia now comprise over half of the value of small and medium-sized businesses’ exports to developing regions.
An additional sign of the increasingly importance of Asia is that China, for the first time, has climbed to second place for the most interesting export regions for small and medium-sized exporting companies.
Unfortunately, the value of exports by small and medium-sized businesses to developing countries decreased during 2016. Data from Statistics Sweden show a decrease of SEK 2 billion. The forward-facing image reflected in this report shows a lower level of optimism amongst small and medium-sized businesses’ view of their development of exports to developing countries.
“For an export-promoting agency such as EKN, this is an important signal to further strengthen support to small and medium-sized businesses, to make it easier for them to conduct more secure export transactions,” says Carl-Johan Karlsson.
“Each day, EKN encounters small and medium-sized businesses who have successfully exported to developing countries”. Yet more can seize the opportunities.
Almost ten per cent of businesses in the analysis stated that they have abstained from export transactions with developing markets due to the risk of not receiving payment. Yet the majority of businesses – 63 per cent – agree that offering credit is a competitive advantage. Amongst those who export to developing markets, this figure is even higher; 70 per cent. At the same time, only 17 per cent have secured their credit to overseas customers in recent year.
“One reason may be that many see it as expensive. This is one impression it is difficult to counteract. However, at EKN we need to increase businesses’ knowledge about the benefits of guaranteeing their export credits and the actual costs. When I meet customers and explain that it costs SEK 6,600 to guarantee three months’ credit for SEK 1 million for a company in India, the reaction is often ‘Why was I unaware of this?’”
The majority believe that paying SEK 6,600 for credit insurance to guarantee your credit of SEK 1 million is positive and good value.
The banks also appreciate secure credit when you require their financing.
Sweden is a small export-dependent country, and needs businesses that can contribute to the country’s GDP and creating jobs. One-third of small and medium-sized companies that export to developing markets state that their export development will result in them employing more people over the coming twelve-month period.
(The SME-report is only available in Swedish.)