Global Trade Is A Key Growth Factor For SME’s In Latin America
By Anuja Abraham
For small and medium sized enterprises (SMEs) in Latin America, engaging in global trade is essential to the success of their business. As found in the fifth edition of the UPS Business Monitor Latin America (BMLA) study, 80 percent of executives state that global trade has been beneficial for economic growth. The BMLA, commissioned by UPS, surveyed more than 800 SME top-level executives in seven countries of the region lending insight into the latest opinions, attitudes and practices of SME decision makers throughout the region.
When analyzing results of BMLA studies conducted after the 2008 crisis, SMEs have identified the opportunities for growth that exist beyond their borders and are gradually increasing their involvement in global trade. According to the 2011 study, 60 percent of SMEs are currently engaged in global trade or plan to do so in the future. Furthermore, executives in Brazil and Chile see global trade as most beneficial to companies with 50 to 250 employees.
“Based on these results we see that overall engagement in global trade is an element for many businesses in the region,” said Griselda Hernandez, Americas Region customer process director. ”Government and suppliers should come together and streamline as much as possible to allow SMEs – a vital force of the economy – to continue growing,” stated Hernandez.
SMEs face several obstacles when it comes to expanding their businesses globally. Ninety percent of the surveyed countries identify reliability in overseas suppliers as the issue that has affected their business the most over the past five years. Increases in delivery times and border delays were the second and third issues listed, respectively. Additionally, taxes on imports and exports were cited as the main barrier for global expansion.
As a result, surveyed executives do not have a positive outlook regarding growth of exports in the next year. Thirty three percent think their companies’ exports will remain at the same level and 30 percent believe it will slightly decrease. Only 5 percent think export activities will slightly grow.
According to Eduardo Gamarra, professor of Latin American and Caribbean politics at Florida International University, these results “show that executives in the region are still somewhat optimistic about the future and this is probably because their economies have not experienced the full impact of the global economic crisis.” Gamarra states that these survey results should be understood against the backdrop of the overall economic performance of the region. ”The performance of the export sector in 2011 was still acceptable but economic indicators show that positive indicators may begin to decline.”
As revealed by the BMLA, surveyed SMEs feel that not only growth in Latin America but also trade other regions has remained stable with a significant increase in imports with respect to the 2010 survey.
Also, an area of interest for SMEs is Corporate Social Responsibility (CSR), being policies on environmental protection most mentioned activity, followed by donations to non-organizations (NGOs), community support programs and corporate activities.