New commission must prioritise 'internationalisation of SMEs'

EU companies active outside of Europe are among the union's most 'innovative and competitive', says Antonio Tajani.

By Antonio Tajani

21 Jul 2014

Nowadays, economic growth is concentrated in extra-EU markets. It is estimated that by 2020, 70 per cent of world growth will take place in emerging economies. However, this is an opportunity for European companies. To seize this opportunity, EU companies must be able to compete in foreign markets. Large enterprises already do it. The real challenge is to allow EU small and medium-sized enterprises (SMEs) to compete globally. But today, too few EU SMEs operate beyond national borders. Only 25 per cent have activities in one or more EU countries other than their own and only 13 per cent are doing business beyond the borders of the European Union. We need to significantly increase these figures. The internationalisation of SMEs has been one of my priorities over my mandate, and it was also part of the EU's new industrial strategy, adopted in October 2012.

The 'missions for growth to promising emerging countries' were adopted as a measure to respond to the economic crisis in Europe and the consequent low demand. Since 2011, I have visited 17 different countries. In the Americas I visited the US, Brazil, Argentina, Mexico, Colombia, Peru, Chile, and Uruguay. In Asia, China, Myanmar, Vietnam and Thailand, and in north Africa and the Middle East I visited Egypt, Morocco, Tunisia, Israel, as well as the Russian federation.

"These missions [for growth] bring together representatives of EU businesses and the authorities of third countries, encouraging future cooperation"

The missions for growth helped create the conditions for win-win situations. On one side, European companies benefit from easier access to external markets. In particular SMEs were helped to internationalise, gain access to foreign markets and influence the authorities of visited countries to eliminate non-tariff barriers, harmonise standards and strengthen the rule of law. On the other side, local actors and authorities have a concrete chance to lure foreign investment. To reach the objectives, the innovative concept behind the missions is that SMEs can take part in political meetings and present their problems and needs directly to the local authorities, participate in business-to-business exchanges to gain insights into foreign administrative and regulatory environments.

Direct contacts between EU entrepreneurs and foreign authorities and companies are also an important part of the strategy to foster durable business relations. These missions bring together representatives of EU businesses and the authorities of third countries, encouraging future cooperation. Since the first mission, I gathered more than 800 participants representing nearly 600 companies and business associations from 26 member states that have embarked on such missions. I signed with my counterparts more than 70 letters of intent and joint declarations to work on common objectives, particularly in the areas of SME policy, tourism, regulatory issues and standards. Implementation measures are already taking shape, including the nomination of SME envoys in countries such as Brazil, Chile, Colombia, Peru and Uruguay, as well as the transposition of European industrial standards as national standards in Morocco, Tunisia, Egypt and more. The last mission for growth I led took place in June
2014 in Panama, Argentina and Paraguay.

It is worth noticing that internationalisation does not mean offshoring, as EU companies maintain their base in Europe. Internationalised companies grow even during dire periods for the European economy, and therefore favour growth and jobs in Europe. EU companies which are active outside the EU are also the most innovative and competitive. 25 per cent of EU enterprises which operate abroad have successfully launched at least one new product in their sector. Only eight per cent of the EU companies operating only in their country can boast such a result. The last missions for growth under my mandate have been to Panama, Argentina and Paraguay. Panama has one of the most rapidly growing economies in Latin America.

"Internationalised companies grow even during dire periods for the European economy, and therefore favour growth and jobs in Europe"

Its annual real GDP growth averaged about nine per cent over the past five years, buoyed by the Panama canal expansion and large public infrastructure projects. Lying at the crossroads of the North and South American continents and the Atlantic and Pacific oceans, Panama is of key international strategic importance. The EU and Panama therefore have genuine interest in increasing bilateral business relations and market integration in mutually beneficial ways to boost strong sustainable growth and create jobs. The fact that European companies are in charge of the canal's enlargement works highlights the opportunities for European business in this country.

The visit to Argentina this year can be seen as a follow-up to the very successful mission organised in this country in 2011. Argentina is a long-standing trade and investment partner for the EU. The EU remains Argentina's second export market after neighbouring Brazil. The EU also remains the biggest foreign investor in Argentina, accounting for about half of the foreign direct investments. Paraguay's growth in 2013 – 13.6 per cent – was the third highest in the world and the country has strong economic fundamentals. There is interesting potential for EU investment in Paraguay due to the country's macroeconomic stability, open trade regime, business-friendly government, low taxation and inexpensive energy and manpower. Up to now, the missions for growth have been a success. I hope that my successor, under the next mandate of the European commission, will consider internationalisation of SMEs as a priority and will go on encouraging business relationships with promising emerging countries and working on diplomatic relations to achieve better bilateral business environment.

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