Neglected Small Exporters
2021-02-21 | by CusiGO
Liofrio caviar sturgeon takes 18 years to spawn. This is a long process for any company, and it is not without risks, so few farmers in the world dare to eat this delicious food. The same is true of the exports of Granada’s small and medium-sized enterprises: Based on years of work, they add a small amount to their balance sheets every year. David Montalban, its chief trade officer, said they had exported 100000 euros of caviar by 2020, a record so far. They do so because their cherished products can be sold outside Spain at the same or higher price as at home, thus offsetting the cost of exports.
“We’re talking about large and medium-sized orders with prepayments, or through microfinance, where there are no overdue payments. It’s true, there are administrative and customs fees, but it makes up for us. “We are now looking to expand in Asia or the Middle East, which seems to make up for the fact that tens of thousands of Spanish companies are selling products or services for less than 50000 euros,” Montalban said. For some economists who have studied this phenomenon, it is a mystery, such as Guido Guerra. He recalled that before exporting, enterprises must face high sunk costs, such as conducting market research, adapting products to local tastes and obtaining necessary certification, Develop new distribution networks and promote them in destination countries. The theory holds that only the largest and most productive companies can absorb this effort on their balance sheets, while smaller companies should not see any advantage in this regard. However, last year, as many as 158200 companies exported $544 million to Spain, according to ICEX. 0.2% of the country’s exports are in the hands of 80.6% of export companies. By contrast, the 5000 largest export companies are responsible for 87% of overseas sales.
This strange feature of the export sector comes from far away. “Through practical experience, I found that our small enterprises, with less resources and low productivity (usually go hand in hand), have formulated two export strategies: one is based on minimizing the entry cost, that is, exporting existing products through distributors. The other is based on subsidies, that is, starting exports through regional or national level internationalization programs, “Guerra concluded in an analysis published on nadaesgratis. He concluded that there was a common link: the first strategy reduced sunk export costs, and the second strategy subsidized them. However, as the economic theory stipulates, this kind of activity can not really help them improve their productivity. On the contrary, they show worse performance indicators than those that are not exported.
Antonio Bonet, chairman of the exporters’ club, blames Spain’s long-standing structural problems, a paradise for micro enterprises with few companies of any size. Julian L ó PEZ arenas, head of competition at the Spanish Chamber of Commerce, puts forward the same argument: “here they make up 95% of the fabric, while in Spain they make up 95% of the fabric It is 83.6% in Germany and 89% in the UK. ” Consultants agreed that after the 2008 crisis, the situation has improved, “but there is still the problem of exportable supply,” Bonet insisted.
Usually, when a company’s overproduction cannot be put into the domestic market, it decides to export. Most people ship goods. “But if you don’t have such a product, how do you fill the container? “Asked bonette. “If you don’t, the unit cost will go up.” The reality that 158000 micro exporters face every day. “If we continue to have very small companies, we will never develop a large textile export. We have to face the barriers to growth, “Bonet complains.
There is also the issue of aid. At present, the most important solution for SMEs to become exporters is developed by ICEX (ICEX next) and xpande cameras. These projects help pave the way for the establishment of a real export sector and guide companies in strategic change. They are no different from other countries. The second is the large amount of grants from different institutions, which are used to visit trade fairs or business missions. These grants are often only used to pay for transfers of travel or hotel expenses, rather than tools to enable companies to develop long-term strategies. Even so, the epidemic has frozen business travel, and unlike the last crisis, many companies will now be unable to move resources away from the border. This is particularly noted by companies such as cartonlab, a small and medium-sized enterprise that designs and manufactures cardboard supports for businesses ranging from shop decoration to TV Station decoration, and opens up space for exhibitors’ designs at international expositions. No longer. “It forces us to reinvent ourselves and design new products, such as separate screens,” says Nacho Bautista, one of his partners. So your export account, which is not very important, will go back to a better time.
Perhaps it is important, as Lopez arenas points out, that these exporters insist. “Interestingly, after the last crisis, when domestic demand recovered, the base of regular exporters continued to grow for at least four years.” The epidemic may be the next export frenzy, because, as the war intensifies, there is at least good news, despite the decline in liquidity: digitization removes barriers and reduces the cost of trade.