The digital divide: Why SMEs must cross borders

August 3th, 2022 – In most economies, small and medium-sized enterprises (SMEs) are the backbone, driving growth and employing a large proportion of the working population. Amid the COVID-19 crisis, they had a matter of weeks to expand, or create online operations and find new markets to survive the accelerated shift towards selling online in a volatile business environment.

According to the OECD, between February 2020 and April 2021, 70 to 80% of SMEs across 32 countries lost up to 50% of their revenue. Thanks to their resiliency and ingenuity, many have been able to weather the storm. However, as markets become increasingly digital, full SME recovery and success hinge on their ability to expand across borders.

When we look specifically at the European Union, fewer than half of online businesses, representing only 8% of the SMEs in the bloc, sell to other EU countries – and only 4% sell outside of the Union. This is an opportunity for the world economy – or a major threat to global prosperity.

SMEs and international trade barriers

Through our research with SMEs, we know that they are crying out for access to digital infrastructure, training and processes to make trade easier. Buyers, sellers and intermediaries now rely on technologies that enable commerce at a speed, scale and efficiency unimaginable just a few decades ago. According to 83% of Indian SMEs surveyed in our research, they still need to learn more about complying with digital laws and regulations, a knowledge gap that then hinders the ability of one of the fastest growing e-commerce markets in the world to efficiently trade and grow.

When these SMEs do try to trade internationally, they often encounter customs administrations that continue to rely on hard-copy documents and manual processes, ill-suited for businesses operating digitally. If we look at the Global Express Association’s Customs Capability Database, 46% of the 139 countries surveyed do not accept or electronically process the data required for the release of shipments in advance of their arrival, even though it has become a global benchmark for efficient and secure customs processing.

More…https://www.weforum.org/agenda/2022/08/smes-small-medium-business-cross-border-enterprise/

Written by World Economic Forum