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SME exports in the pandemic

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A sign in french about mandatory facemasks

SME internationalisation in Interreg Europe projects looking at the impact of the pandemic

The internationalisation of SMEs activities is acknowledged as a factor of competitiveness for businesses and an engine for growth and welfare for the economy and the territories.

It is a popular topic among several Interreg Europe projects, as illustrated in this policy brief, demonstrating its importance in the framework of regional development policies dedicated to SME support.

Some of those projects were given the opportunity to prolong their collaboration beyond the initial project lifetime in order to explore the effects of the COVID-19 pandemic on export activities and the related reactions on the policy level. Those projects are:

  • Compete In - Competitive territories through internationalisation: SMEs competitiveness in globalised regions
  • EIS - Everywhere International SMEs
  • SIE - SME Internationalisation Exchange
  • UpGradeSME - Improving policy instruments supporting innovative SME performance
SME internationalisation perspectives in the pandemic | Collecting facts

Pannon Business Network Association, the Lead Partner of UpGradeSME brought together online recently representatives from the above-mentioned projects, as well as further export specialists, to exchange their learnings on the impact of the pandemic on the export activities of SMEs.

Also the Interreg Europe project INTER VENTURES - Policies to promote the internationalisation of SMEs for more competitive regional ecosystems in border areas of the EU projects, which started in August 2019 and found itself confronted with the pandemic, contributed to the event.

A significant part of the event was dedicated to the preliminary results of the surveys performed by each of the projects in their partner regions. And, while not all results are available yet and still need to be compiled at project level, some common initial learnings could be shared:

COVID-19 as such did not significantly and durably affect the level of export activities of a large number of SMEs already engaged in international commercial relationships.

This means that most of those companies were able to adjust their operations in order to maintain a level of export activities at least similar to the one before the COVID-19 outbreak.

However, the pandemic did negatively impact companies in their early phase of exporting or without export experiences.

They were often not able to enter new international markets, either because they were struggling with maintaining their national activities or because they were not able to generate new contractual relationships.

The different surveys performed by the partners have shown that in general the impact of COVID-19 on internationalisation activities has been lower compared to other causes during the same period, such as:

  • The stranded ship in the Suez channel and the consequences on global supply chains
  • The scarcity of electronic chips
  • Brexit (for companies in the UK)

From a long-term perspective, the most important limiting factor for internationalisation of SMEs remains the lack of qualified staff.

Going digital as a response to the pandemic

Preliminary results from the projects show that the increased use of digital technologies has been supportive to maintaining operations during the pandemic, including export, and that an increased digital maturity of both organisation and staff is considered relevant to mitigate the impact of the pandemic. Access to digital fairs was mentioned for instance as a way to overcome the financial and time limitations of managers.

However, a majority of SMEs also express a strong wish to return to onsite trade shows and exhibitions as well as personal contacts with international prospects. Especially the importance of personal contacts has been highlighted by most speakers. Both approaches will need to go hand in hand in the future.

Awareness and business support delivery

Raising awareness of SMEs about the opportunities provided by international commercial relationships – both export and import – remains a challenge for policymakers and business support providers, which has not become lower with the pandemic.

Some options mentioned during the event to overcome these challenges were:

Increased promotion of existing public support schemes to reach more SMEs, as many remain unaware of the opportunities.

Focus on first-time exporters and micro-/small businesses, with for instance simple and fast access to measures such as voucher schemes, co-financing of participation in fairs, etc.

Increased market intelligence by providing more targeted information on foreign markets, helping SMEs to better identify and prioritise their target markets.

Reinforce financial support to investments in international development of businesses.

Support the digitalisation of businesses and delivery of support with e.g. virtual trade missions and exhibitions.

The above content does not consider the recent developments triggered by the situation in Ukraine, which has already induced new challenges for international value chains.

Building an appropriate policy answer to the challenges of SME internationalisation will be further explored by the respective Interreg Europe projects in the following months. Their results will be published on their project websites – have a look!

A recording of the event organised by UpGradeSME as well as the materials presented are available here.