Hungarian SMEs do not feel confident enough to start expanding in foreign countries in Europe. Around 75% of them do not see an opportunity in foreign expansion in the current state of the market, a research conducted by M27 ABSOLVO, a finance and export consulting firm, revealed.
More than 10% of SMEs are not able to focus on foreign markets since they are fighting for survival on the domestic market, the research pointed out.
Around fifth of the respondents do not try to attract customers on foreign markets, despite the fact that most companies see no chance for the increase of the domestic customers’ purchasing power. A significant proportion of SME leaders consider foreign expansion a burden, like if it was some sort of a luxury, M27 ABSOLVO found.
This is one of the fundamental obstacles to entering new markets for SMEs. However, with a good expansion strategy, the costs of expansion are similar to a company’s few days’ or at most a few weeks’ operation cost. In the meantime, they have the possibility of earning a fifty times bigger income than on the domestic market.
M27 ABSOLVO finds that not even companies in segments dealing with products that are very much suitable for export, like agriculture, IT, food industry and manufacturing, exploit the potential of the European market of 500 million habitants. Around 20% of SMEs are looking for growth exclusively on domestic market, and do not even consider foreign expansion without their contact network and the in-depth knowledge of the foreign market.
Turning to an expert who knows the target country’s market well does not come into the mind to even those company heads who do consider foreign expansion. Around 50% of the participants would not turn to a consultant even if they would intend to expand in foreign markets. In the meantime, only 2% of respondents are interested to turn to an expert who provides counseling in entering foreign markets.