International Cross-border Trade: Challenges and Solutions facing SMEs
On Tueday November 14th, SME Europe of the EPP together with SME Connect, organized a working breakfast on “International Cross-border Trade: Challenges and Solutions facing SMEs” in the European Parliament, hosted by Jörgen WARBORN MEP, member of the INTA Coommittee and Vice-President of SME Europe.
The panel saw the participation of Peter BERZ, Head of Unit for Single Entry Point for Enforcement, Market Access, and SMEs for DG TRADE at the European Commission; Roberto CORCIULO, President and Senior Consultant of IC&Partners Group; Eleonora CATELLA, Deputy Director of International Relations at BusinessEurope; Eric PELLETIER, Vice-President and Head of International Government Relations of Alibaba; Bart Van ZWOL, CEO of WHC Labs; Greet DEKOCKER, Managing Director of BeCommerce and was moderated by Dr. Horst HEITZ, Executive Director of SME Europe of the EPP.
Jörgen WARBORN MEP, opened the discussion by reflecting on a moment of realization in 2018 or early 2019 when he noticed growth figures that indicated Europes economic competitiveness was diminishing compared to other regions. He said that addressing this issue was important to prevent Europe from becoming the “poor continent” in the next 20 years. Emphasizing the role of SMEs in driving growth, he continued that policymakers needed to make strategic moves to support them in the context of trade. Mr Warborn pointed out that out of 22.6 million SMEs in Europe, only 600 000 engaged in cross-border trade – there is an untapped potential among the SMEs.
Discussing Free Trade Agreements, he acknowledged the SME chapters but expressed that they could be improved. He called for a collective effort to identify and overcome the barriers preventing SMEs from international trade. He also identified two major obstacles – regulatory burden and red tape. While acknowledging recent efforts to reduce reporting obligations, he advocated for a more significant reduction in administrative burdens, proposing a goal of 25 to 30%.
In conclusion, he invited input from the audience to improve SME chapters and address the real challenges faced by businesses to enhance competitiveness in Europe.
Continuing with keynote speech, Peter BERZ, Head of Unit for Single Entry Point for Enforcement, Market Access and SMEs for DG TRADE, Mr Berz discussed collaboration with various services and agencies, including DG GROW and ESMA and emphasized the need to share information about what Europe offers for SMEs to engage internationally. He emphasized the significance of trade for growth, particularly outside the EU in regions like Asia, Latin America and Africa. He talked about the extensive network of Free Trade Agreements already in place, covering 44% of exports.
The heart of the trade policy agenda are the SMEs but they face challenges in global trade, including limited capacity for administrative procedures and information access. He promoted DG Trade’s initiatives to assist SMEs, such as the Access2Markets portal, the Single Entry Point for raising concerns and SME chapters in Free Trade Agreements. Mr Berz also shared information about outreach events in Member States and highlighted the importance of creating an SME friendly environment in trade partner markets and engaging in bilateral and multilateral efforts.
Eleonora CATELLA, Deputy Director of International Relations at BusinessEurope, continued the discussion by bringing out the importance of SMEs for EU competitiveness. Agreeing with the concerns about administrative burdens, she welcomed President von der Leyen’s commitment to a 25% reduction in proportionate requirements. She emphasized the importance of openness in the EU’s strategic autonomy and highlighted the role of Free Trade Agreements in ensuring market access for both exports and imports. She echoed the need for FTAs to be SME-proof and called for enhanced visibility on tariff phase-out and information dissemination.
Acknowledging the significance of all chapters in FTAs, she emphasized the importance of enforcement and implementation, noting the need for two-way information flow to address on-the-ground challenges.
Greet DEKOCKER, Managing Director of BeCommerce, provided insights into the digital trade landscape in Belgium. She noted that out of 56 000 webshops, only 6 000 generate over 100 000 euros in turnover annually, highlighting the prevalence of small micro-enterprises in digitalization.
When examining the correlation between digitalization and export markets, among digitally transformed businesses, 21% of their turnover was exported. She emphasized that once businesses embraced digitalization, they were more likely to engage in export activities. Ms Dekocker outlined the challenges faced by businesses in digitalization and export. She stressed the symbiotic relationship between the two, as the World Wide Web inherently facilitates international trade. Digitalization, particularly through webshops and marketplaces, can lead to increased export capabilities.
Highlighting the role of marketplaces, she advocated for a level playing field to encourage SMEs participation and trustbuilding in these platforms. She suggested creating an environment that supports European marketplaces and adressing the trend of retailers entering the marketplace game.
From the SME perspective, Roberto CORCIULO, President and Senior Consultant of IC&Partners Group, representing a private Italian-based company supporting SMEs in internationalization, Mr Corciulo emphasized the importance of unity in Europe despite its diversity and highlighted the need for an European identity. He emphasizd the growing significance of online exports. Despite various support measures from the public system, he noted that small companies struggle to grasp and utilize available information effectively. He concluded with the challenges faced by SMEs: including a lack of professional skills, digitalization and demographic shifts and called for targeted financial support. It is important to provide non-financial services and there is a need for more effective and widespread communication of public tools to support SMEs.
Eric PELLETIER, Vice-President and Head of International Government Relations of Alibaba, started by explaining the background of Alibaba.com, which was initially designed as a platform for Chinese businesses and it has evolved into one of the worlds largest B2B marketplaces. He emphasized its role in diversifying trade globally. The platform helps SMEs in navigating aspects of international trade – such as promotion, language considerations, customs, finance and intellectual property registration.
Contrary to common perception, Alibaba sells more European products to Chinese consumers than it imports into Europe. Addressing SME concerns, Mr Pelletier discussed Alibaba’s efforts in IP protection, advisory boards, and easy-to-access forms for customs. He also highlighted the platform’s role in supporting SMEs in reaching international markets, even those who may not initially consider themselves exporters.
He acknowledged the challenge SMEs face in adopting digital strategies and emphasized Alibaba’s commitment to digital skills training. He concluded by encouraging SMEs to explore international markets.
Bart Van ZWOL, CEO of WHC Labs, representing a small family owned business, highlighted the challenges and rewards of international business as an SME. Dealing with regulations, cultural differences and compliance issues have imposed difficulties – nevertheless, WHC Labs learned to adapt and grow stronger. Looking ahead, he expressed dedication to international cross-border business and shared plans for expanding into the EU market.
Focusing on their experience in Asia, Mr Zwol discussed their success on Alibaba’s platform and he attributes their success to being 100% European products, which resonates well with Chinese and Eastern consumers. He emphasized the potential for European small businesses to bring their products to international markets. Addressing concerns about international business, he stressed the importance of better communication, supply chain planning and initiatives for SMEs.
Mr Zwol highlighted the advantages of expanding to the United States due to its larger market size, one language and simplified regulatory processes compared to the complexities within Europe. He encouraged SMEs to view international expansion as both challenging and a chance for more business opportunities.