Only a quarter of small and medium-sized businesses export even though growth prospects overseas are better than strictly through domestic sales, according to a survey of more than 1,000 companies sponsored by UPS.
The survey sample
shows the untapped potential for exports, but is substantially more than the 1 percent of U.S. companies overall that the U.S. government and other experts estimate are engaged export activity.
The uncertain economy and government policies are the main factors that have discouraged many companies from considering the export path, but of exporters surveyed 64 percent said they saw a financial return within two years and 34 percent said they saw one in less than six months. Almost half of respondents (49 percent) said they expect to double their exports by 2015 and 66 percent say that up to 25 percent of their annual revenue is from exports.
Small firms said they had the most success exporting to Canada, Mexico, the United Kingdom and Australia - countries with which the United States has free trade agreements or bilateral trade relations. Almost a third (62 percent) of respondents said they had not had as much success exporting to Brazil, Russia, India and China (the BRIC countries) in the past 10 years.
The United States does not have trade agreements with those nations. However, 22 percent of exporting small and medium-sized enterprises (SMEs) have successfully exported to China.
The best way, according to UPS, for businesses to learn about the feasibility of exporting is to talk with other companies that have experience with overseas sales and providing staff with tools and training to deal with export processes. Other strategies used by respondents for entering new markets include partnering with or acquiring companies with previous experience, and learning the local language or hiring an interpreter.
The survey said government policy changes, such as offering tax incentives and reducing regulations, could encourage companies to give exporting a try. Priority stragegies to help SMEs start or expand international trade activities include helping them better manage exporting costs, identifying sales opportunities and helping them find suitable overseas partners.
“Global commerce flows along the path of least resistance, so it’s incumbent upon government and business to work together to remove trade barriers and help businesses grow beyond our borders, resulting in economic growth in return,” Dan Brutto, president of UPS International, said in a statement. “Businesses that export are 20 percent more productive and produce 20 percent greater job growth than non-exporters."
The survey said trade facilitation and freight transportation companies, as well as policy-makers, should focus trade development efforts on medium-sized companies because nearly half of such respondents said they would export if barriers to trade were removed. Small companies (85 percent) said they still would not take advantage of exporting even with fewer barriers.
As a global provider of small package and freight delivery services, as well as logistics outsourcing, UPS stands to benefit from greater international trade and has tried to position itself as a go-to resource for export ideas and policy. Many small and medium-sized businesses let UPS handle the complex shipping and customs processes for them.
UPS is actively engaged with the U.S. Department of Commerce in promoting government export assistance programs, also available at www.export.gov
. The U.S. Commercial Service at www.trade.gov
, for example, specializes in matching U.S. companies with potential overseas buyers. The Obama administration has placed a huge priority on exports, with the goal of doubling exports over five years to $3.14 trillion by 2015.
For more information about what the Small Business Administration and other agencies are doing to recruit firms and give them the tools for expanding overseas sales, see "SBA opens export doors"
in the December American Shipper
. - Eric Kulisch