- November 2, 2022
- Posted by: Anish
- Category: Feed
The advent of the COVID-19 pandemic created a deep divide between businesses and consumers. This brought a sense of urgency for businesses to adopt technology to fill the gap and opened unexplored opportunities of growth and many of them, including small and medium enterprises (SMEs), started exploring new ways to optimise business processes and engage a higher number of vendors and customers.
According to a recent survey, 9 in 10 SMEs say cross-border trade is a key area for business growth, and 2 out of 3 SMEs use social media today as a sales channel. This change in approach by SMEs has significantly contributed to the increase in international trade volumes as the world recovers from the economic downfall of the COVID-19 pandemic. However, SMEs still need to build portfolio of products, services, and solutions that cater to the global market.
Challenges faced by SMEs:
Despite the immense potential that cross-border trade holds, small and medium business owners contributing to growth story have been struggling. They are not sufficiently armoured to handle the disproportionate number of obstacles, when it comes to seamlessly integrating technology into their current workflows and reaping the benefits of cross-border trade. Challenges hinder the growth graph, and it is high right time that we acknowledge those.
As per PayPal’s SME Digital Readiness Survey, SMEs are citing challenges related to high costs, exchange-related issues and concerns around fraud while doing business across borders. While many of them are now increasing their reliance on technology to solve these problems, new roadblocks are cropping up due to the lack of an existing structure.
The OECD report on SME participation in a globally integrated economy mentions complexity in trade and cost of trade as the most significant constraints for SMEs to participate in the global value chain. Distributors and aggregators rely on intermediaries due to a lack of reliable discovery options.
Traditional cross-border supply chains in most segments such as food and agriculture, retail, manufacturing, homecare, fashion, and more are broken and fragmented. In fact, SMEs looking to sell overseas have been unable to acquire customers and manage various end-to-end operations, such as logistics, quality checks, payments, and more, which has resulted in an unreliable supply chain.
Another challenge that is impeding SMEs from directly participating in this trade is the trust deficit between parties. A lack of secure and reliable relationships exacerbates the difficulties in processes of navigating international transactions, quality verifications, tackling country-specific government regulations and procuring finance (credit & escrow facilities). These roadblocks can often become barriers for SMEs looking to enter the markets.
Indian SMEs & Leadership:
There is a widespread belief that a global recession has set sail and is about to hit us in six-to-12 months, but Indian SMEs (Small & medium Enterprises) have reasons to stay calm as most business leaders from the world’s fifth largest economy feel they can survive the economic headwinds.
Moreover, the number of Indian leaders confident of weathering the looming storm far out ways those in European nations. As against 97% of leaders confident in the Asian country, just 43% in the United Kingdom, 66% in France and 68% in Germany believe they survive the recession.
At the same time, with Rishi Sunak becoming the 1st Indian-origin prime minister of the UK, it is now impossible to deny what has been evident for some while: Indian talent is revolutionizing the Western world far more than had been expected 10 or 15 years ago.
The success of Indian-origin talent is at this point overwhelming. Significant CEOs of Indian origin include Sundar Pichai of Alphabet, Satya Nadella of Microsoft, Parag Agrawal (former CEO) of Twitter, Shantanu Narayen of Adobe, Arvind Krishna of IBM, Raj Subramaniam of FedEx, Sonia Syngal of the Gap, and Laxman Narasimhan of Starbucks.
India has historically been skilled at absorbing and synthesizing foreign influences. That may help make Indian SMEs especially good at adapting to very different foreign and global environments.