Reports

SMALL AND MEDIUM ENTERPRISE: COMPETING IN THE GLOBAL MARKETPLACE
WEDNESDAY, DECEMBER 6, 2006
2:00 PM – 4:30 PM

Moderator: Manuel Rosales, U.S. Small Business Administration

Discussants: Fay Housty, CARICOM; Minna Israel, Scotiabank; Orlando Mason, Organization of American States; Anthony Maughn, Caribbean Development Bank; John Price, InfoAmericas; Virgilio Tedin, Secretariat of Industry, Commerce and Small & Medium Business; Robert Wright, Jamaican Business Development Centre

The Context:
As the region opens up to the global market, small and medium enterprises are faced with new challenges and opportunities. How do SME's with their limited resources effectively and efficiently compete in the international marketplace of the 21st Century?

The Challenge:

• Can SME's effectively access markets, technical expertise and credit to meet the demands of competition?
• What are the technologies and innovative ideas that can help SME's compete?
• What are governments, technical organizations and private small business service providers in the Americas doing to promote and facilitate small business trade?

Points and Comments Brought up in the Session:

• 4 Major areas concerning crime were brought up in the session
  • Key characteristics of SME’ development
  • Government interaction and support for SME’s
  • Affect of technology on SME’s
  • International opportunities for SME’s
• Key observations on market opportunities for SME’s
  • Four matters were identified as important for SME owners: capital, taxes, labor cost, registration bureaucracy
  • Many SME’s in the region are characteristically in service.
  • The basic needs of SME’s are fed by more aggressiveness, more investigation into sources of raw materials, adaptation to new circumstances, and access to capital.
  • SME’s have survived hard moments and bad governments. They work developing strategies to help them grow: they try to reduce bureaucracy, open foreign markets, and by establishing their own funding arrangements.
  • The OAS SME project in Central America and Panama involves 120 SME’s and has had good acceptance and uptake; This project serves as a model for SME development.
  • When banks consider support of SME’s they have their own survival at stake; if a bank cannot see business, it cannot grow. Thus no new business will be developed.
  • SME’s in the region can be competitive in providing services (mainly in tourism, music, financial).
  • Historic ties with the United States, exchange of people, values shared among regions, etc. these are competitive advantages.
  • Tourism is good not only for the tourists that go visit the country but they become potential importers of products of the country just visited. Tourism has a multiplier effect that needs to be developed into greater opportunities.
• Key observations on the role of government and FTA’s
  • Coordination of agency activities abroad and domestically (in the case of the US) will strengthen the range of support for SME’s.
  • All people involved in consulting or government agencies dedicated to SME’s must organize activities for concrete results. Argentina has found business matchmakings to be particularly effective, citing Washington, DC and in México events as recent examples. Small companies are eager to do this. They like it.
  • Sectors full of risks must be helped with tools that mitigate threats.
  • Governments should help SME’s and encourage entrepreneurship among citizens.
  • Jamaica Business Development Centre endorses market integration in the Caribbean and with Central America and the US.
• Comments concerning constraints to SME development
  • Without financial resources new market exploitation is impossible. Everything costs money.
  • The absence of new markets in the Caribbean is a difficulty that SME’s have to face in the region.
  • Demand and supply do not play their market role. That’s why governments have to help SME’s.
  • Governments have to get out of the way of banks. They will put money where the need is.
• Key observations on the role of technology and SME’s
  • Against all expectations, SME define and learn in a very effective way all the tools we have in internet.
  • Technical institutions are very important.
  • Government bodies and technical organizations have to work with SME’s to take advantage of the tools that already exist in internet or existing best practices.
• Key observations on SME’s in the international marketplace
  • Before talking about promoting trade, let’s talk about improving the business climate in our own countries.
  • Exporting is not for everybody. We should concentrate on SME’s that are READY TO EXPORT.
  • FTA’s have helped to grow the viability of SME’s; there is value government endorsement for the SME sector.
  • SME’s will not be able to compete in global markets if production costs are not lowered.
  • There’s a synergy among big companies and SME’s. The example was given of SEARS’ use of local SME’s for maintenance for its machines.

Questions and Answers Brought up in the Session:

• How can ITC help SME's to get into international markets? This is the question governments should ask themselves.
• How do SME compete?
  • They can respond to changes in the market, they have better customer care; they pursue new markets through joint ventures, outsourcing arrangements, etc.
• What are the technologies that can help SME’s compete and what are government actions that help?

Recommendations Made:

• Recommendations concerning government and non-state support of SME’s
  • There are no recipes for SME’s because every country should be analyzed individually and after a very good analysis we can get the answer on how to help each country.
  • We need stats and to measure the real size of the SME’s in the region.
  • We have to develop the SME sector by creating new opportunities for them. The experts and people with experience can be the best helpers on this and mainly the market.
  • There has to be a reform on government regulation of SME’s; Governments must create proper conditions for SME’s to thrive.
  • It is important that there are different standards according to the size of a SME depending on each country.
  • Setup credit bureaus; Mexico and Chile are practices of best examples for capital access.
  • SME’s have to learn to share best practices; they certainly have a lot and there is room for independent forums to assist them.
    
  • There is also a need to recognize market niches where each SME can be competitive and successful. This will depend on each country’s culture and situation.
  • OPIC is a very good way of financing small business in Latin America and the Caribbean.
  • Simplify the credit & capital access: flatten the rates and make each one of them pay taxes. SME’s aggressively look for their markets.
  • Prior to promoting export promotion programs, countries should help SME’s to consolidate themselves as companies in the domestic market.

Back to Top