European SMEs Look to Emerging Markets for Growth

Following in the footsteps of larger multinationals, Europe’s small and medium-sized enterprises (SMEs) are increasingly entering emerging markets to find and exploit niches for their businesses, according to new research from the Economist Intelligence Unit. The report, "New Horizons: Europe’s Small and Medium-Sized Businesses Look to Emerging Markets for Growth," also finds that the so-called BRIC countries (Brazil, Russia, India and China) lead the field as emerging market destinations for European SMEs.

 

The report highlights that the rise of emerging markets is not just a big business phenomenon. Many European SMEs are deeply engaged as well. Although only a minority of Europe’s millions of SMEs overall operate outside their home markets, many of those that do are looking to emerging markets for growth. Almost 90% of the SMEs surveyed for this report, all of which operate outside their domestic markets, are planning to do business in emerging markets in the coming year.

 

While many businesses used to go to emerging markets in order to lower their production costs, Europe’s SMEs are primarily seeking to tap into the rapidly expanding middle classes of emerging markets, either directly or else via the larger multinationals that they supply.

 

The BRICs will attract most attention from European SMEs in the coming year, followed by other near-shore markets. Growth rates, the degree of risk, ease of access and historical links all guide the process of how markets are selected to operate in. The top-10 emerging markets that Europe’s SMEs plan to do business with in the coming year are, in order of preference: China, Brazil, India, Russia, United Arab Emirates, Poland, Czech Republic, Morocco, Romania and Turkey.

 

 

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