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Export performance of Hungarian SMEs below EU average

The export performance of Hungarian small and medium-sized enterprises (SMEs) falls short of the EU average even as Hungarian microenterprises surpass both the EU and regional average in exports, the National Bank of Hungary (MNB) said on Wednesday in its annual Growth Report.  

In Hungary almost all enterprises belong to the SME sector, while their share of total capital stock, investment and value added is close to 50%, according to state news wire MTI.

The MNB found that roughly 20% of exports of both goods and services can be linked to SMEs. Within this, the largest portion of exported value can be attributed to medium-sized enterprises (15% of total exports) both for goods and services.

By contrast, some 75% of large companies export, with most exporting both goods and services. SMEs fall well behind this, as only 5% export, and this is mostly restricted to goods. The dominant micro and small enterprises are less active on external markets, while on average 50% of medium-sized enterprises export.

The smaller an enterprise, the longer it takes for it to enter the export market after the establishment of the company as the incidental costs of exporting are higher the smaller the firm, the MNB report noted. About 40% of exporting microenterprises export upon entering the market, while the remaining exporters only start selling abroad 1-3 years after entry.

The performance of exporting SMEs exceeds that of non-exporting SMEs several-fold. The productivity of a goods-exporting SME is more than twice, and that of a services exporter four times greater than that of a non-exporting SME, the MNB found.

Exporting SMEs also outperform non-exporters in terms of capital intensity, investments, added value and productivity. At exporters of goods and services, total factor productivity grows 2% faster compared to non-exporters, both over the short and medium term.  

Data also show that almost three-quarters of SMEsʼ manufactured exports can be linked to enterprises related to medium-level technology industries. Exports of enterprises of medium to low technology represent the highest share within manufactured exports. Service exports offer lower value as they are mostly less knowledge-intensive, the report found.

The production of higher-quality, more technological or knowledge-intensive products or services would provide SMEs with additional growth opportunities, suggested the MNB.

Despite the fact that exports generate a number of benefits, still only a small number of SMEs are engaged in exports, which is mostly because they face more entry obstacles, concluded the MNB. Most of the factors that hamper exports arise from size and are related to the absence of properly qualified staff, financing, regulations and the high cost of adopting standards, and limited access to information.