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Go global, today's SMEs mantra!

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BANGALORE, INDIA: The term 'go global' is a happening phrase and only small businesses understand what actually it means for them. We all know Indian SMEs play a vital role in our country's economy through its significant contribution in various platforms. SMEs in India should understand their potential benefits of expanding to international markets. They should take advantage of these circumstances by eliminating trade barriers and reach out to the world.

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How SMEs can quickly profit and prosper?

The answer would be - Go Global!

You don't have to be a big company to go global. You just have to be smart about how you go about it. Analysis alone won't help the enterprise to cross the borders. But rather, a strategy which is developed, that identifies a foriegn market where you have a competitive advantage, lets you know about how things can be taken forward. And it is also the greatest potential to success, as well as the best way to build a bridge into that market.

Now If asked, three reasons why SMEs should trade across border, would be:

a) Lots of buyers in the global market

b) Diversification through connections

c) Get best deal for your business

Any SME considering to expand their business abroad needs to do a lot planning before taking the leap, since it involves a lot of things which has to be addressed. But in order to become more competitive and enter the global market, small and medium enterprises (SMEs) are increasingly looking for technical collaboration with their counterparts around the globe.

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For example, many Indian startups and SMEs are doing well in Canada. Similarly, a deal with some large US or UK company, could be the gateway into their markets. It's all about exposure. It helps to build your business and grow faster.

"Things can improve by encouraging entrepreneurship and increasing partnerships with international business organisations. That will open newer avenues of business and revenue generation. Also, it will lead to better employment generation by SMEs," said Y R Sharma, Joint MD, KHS Machinery Pvt Ltd.

SMEs continue to face challenging working conditions. High spending on inputs, finance and transport have hurt the profitability of most of the state's SMEs. Numerous problems relating to marketing, export promotion, bank finance, power supply, infrastructure facilities and most importantly unavailability of skilled labour in urban and rural areas are faced by SMEs. In some segments, such as engineering and textiles, global economic weakness has had a major impact on business.

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Engineering Export Promotion Council (EEPC) India says Indian SMEs are responsible for about 35-40% engineering exports. Therefore, this vibrant sector needs constant encouragement and attention.

Mr. Priyankar Baid, Founder, SMEsauda.com said,"SMBs are going global in multiple ways- exporters are setting up overseas branch offices/subsidiaries in critical markets and importers are setting up sourcing offices. Service companies (especially professional services) are getting in strategic tie-ups with their counterparts in other countries to service global needs of their clients. There are also increased instances of outbound M&A driven by lower valuations in US and Europe (due to the economic crisis) even from mid-size companies. This has been facilitated by availability of multiple new funding options like leveraged buyouts to SMEs that were not earlier available."

He also added,"There are also a significant number of mid size companies setting up branch offices in overseas markets. Even the smaller IT or outsourcing SMEs are hiring marketing personnel (who typically work from home or small offices) for getting better access to their markets. The relative decrease in onshore wages is further fuelling this trend. Another example can be the setting up of sourcing offices in China by many SMEs driven by the need to monitor their critical suppliers and source better."

The Internet and e-commerce have effectively made the whole world our neighbourhood and reach nearly every customer. This is something all businesses should look to seize upon in order to prosper. So when are you crossing the border?

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