Contribution of The Netherlands Chamber of Commerce to the EC Consultation on Small Business, big World a new partnership to help SMEs seize global opportunities July 2011 Interest Representative Register ID number: 64945441527-14 The Netherlands Chamber of Commerce () Koningskade 30 2596 AA Den Haag The Netherlands Introduction / general comments The Netherlands Chamber of Commerce welcomes the Commission s attempt to seek a more integrated and coherent approach to public support for EU enterprises aiming to do business outside the EU. We are pleased to have the opportunity to contribute to the European Commission s strategy, with our extensive hands-on experience in the field of internationalisation and network of regional offices (379.000 visits to the international trade section of our website, 700 export strategies, 30.000 telephone inquiries and over a 1.000 individual advisory meetings annually). On European level, we mainly see added value in the field of trade policy, such as activities related to the removal of tariff and non-tariff barriers, EU programmes that built on proven concepts, as well as promoting cooperation between existing service providers and facilitation dialogue between them. International trade promotion in terms of delivering services to SMEs is best achieved by Member States (by reason of effects; see subsidiarity principle and by reason of specific Member State needs and interests). Currently there appears to be a lack of cohesion in the Commission s approach to internationalisation support in third countries. This apparent lack of cohesion has the potential to reduce transparency, create confusion for businesses and create competition between EU structures themselves as well as with Member State structures. It is becoming increasingly unclear who does what. For example, the Enterprise Europe Network, which mission it is to help companies doing business on the EU s internal market, recently became active with branch-offices in 19 non-eu countries with the additional goal to ïnternationalise beyond the single market., creating confusion about its profile. The scope of the EEN should remain in Europe. In addition, EU business centres are being set-up around the world with the same goal, to internationalise beyond the single market, and without a clear need for their services being demonstrated and thereby competing with Member State services. To conclude, despite the good intentions and principles with regard to the development of a coherent approach by the European Commission, this has proven to be challenging and does not mesh with reality on the ground. On the contrary, as a matter of fact. With our contribution to this consultation we hope to help the European Commission to reverse this apparent trend. Pagina 1 van 6
Do you agree that SMEs need public support to tap international markets (outside the EU)? The lack of financial and other resources (expertise, qualified personnel) at the disposal of, in particular smaller SMEs, provide the main rationale for public support to tap into international markets. The EIM study *, that came as a reference document with this consultation, affirms that public support can indeed contribute in promoting internationlisation. 11% of SMEs that received public support said they would not have internationalised without mentioned support. 20% report that they have internationalised earlier and 35% report an increase in international business due to support activities. Overall, 55% of SMEs stated a positive effect of public support. These conclusions confirm the experiences we have in the support we provide to SMEs on a daily basis. This support lowers the barriers for SMEs to enter international markets, in particular with regard to the more difficult markets outside the EU where most of the future growth is expected. This public support to enterprises should in principle be provided by Member States and not compete with the private sector. In what areas do you feel public support is particularly essential? We feel that public support is particularly essential in the areas that address the largest internal and external barriers to internationalisation and where public support can make a difference. According to the EIM study, these are high cost of internationalisation, lack of qualified personnel, lack of adequate info and tariff and other trade barriers in foreign markets (see figure 1 and 2). The support can be in the form of financial support but also the provision of market information, information about laws & regulations in target countries, trade missions with matchmaking, economic diplomacy and training personnel with the set-up of internationalisation plans and technical aspects (logistics, customs, taxes etc.), especially in the form of programmes. Figure 1 Importance of internal barriers for internationalisation, by size class of SMEs, average score on scale 1 (not important) to 5 (very much important), for internationally active SMEs only Importance of internal barrier 4 2 0 Internal barriers for internationalisation Price of firms products High cost of internationalisation Quality of firm's products Qualified personnel Specification of firm's products Language other barriers Source: EIM (2010). Internationalisation of European SMEs. Brussels: European Commision. * EIM. (2010). Internationalisation of European SMEs, Brussels: European Commission Pagina 2 van 6
Figure 2 Barriers related to the business environment for the enterprises in EU-EEA markets and non-eu-eea markets (percentage of SMEs that state important) % of SMEs that state important 50 40 30 20 10 0 External barriers on non EU/EEA markets Lack of capital Lack of adequate public support Lack of adequate info Costs of difficult paper work for transport Laws & regulations in foreign countries Tariffs & other trade barriers in foreign market Cultural differences Tariffs and other trade barriers in home country Source: EIM (2010). Internationalisation of European SMEs. Brussels: European Commision Which institutions do you consider best placed to provide such support? Several institutions provide valuable services but in our experience the main ingredients for success are institutions that speak the language of the entrepreneur, are easily accessible (low barrier for entrepreneur), and work with experienced advisors with a hands-on approach. SMEs orientate themselves via their national support provider (such as trade departments of Embassies, Consulates and specific business support offices) or private sector service providers located in the international market (frequently upon referral by a governmental agency or business support organisation in the home market) to receive guidance and support (service delivery) for doing business in the country concerned. The strength of the Chamber network lies with its proximity to business and therefore their knowledge of the entrepreneur which is essential to assess the needs of the SME. Secondly, as the Chamber is positioned in between private and public sector, it has a unique role as a broker of information and services, offered by several organisations. In which areas could activities at EU level be particularly useful (add value)? We mainly see European added value in the field of trade policy activities related to the removal of tariff and non-tariff barriers as well as promoting cooperation between existing service providers and facilitation dialogue between them. International trade promotion in terms of delivering services to SMEs is best achieved by Member States (by reason of effects; see subsidiarity principle and by reason of specific Member State needs and interests). Pagina 3 van 6
Furthermore we see added value in EU programmes which directly address to the needs of SMEs in their challenges abroad (Gateway to Japan/S. Korea, the invest in programmes). We would very much welcome more of these kind of programmes from the Commission (such as futher Gateway to programmes). Finally, we see an essential role for the EU as a forum to exchange best-practises of Member State policies and activities. Do you agree with the presumption that SMEs could benefit o from greater visibility of available support? How could this be achieved? According to the consulation document 24% of the internationalised SMEs are aware of public support programmes for internationalisation that could be used by their enterprise. It is therfore clear that, SMEs could benefit from greater visibility of available support. This can be achieved by extensive promotion / awareness raising campaigns by national business support organisations in the home country that are close to them such as Chambers of Commerce, in cooperation with their partners at home and abroad. o from (improved) cooperation of organisations providing support? Improved cooperation and coordination among service providers is essential, especially at Member State level and between public and private sector which is alaredy taking place in the Netherlands. The main focus must be to support the SME as effectively as possible. Any European dimension to improve cooperation should be carefully considered and respect the principles of complementarity, subsidiarity and additionality. The European dimension should focus itself to coordination, facilitation and reinforcement of existing MS structures, provide services to MS structures and refrain from delivering services to SMEs directly as much as possible since this would in most cases not be in accordance with stated principles. Do you agree that an online portal bringing together relevant information about doing business in certain markets abroad could be a useful tool o for intermediaries (providing business support)? o for SMEs themselves? An online portal providing relevant information on foreign markets (country information, market/ssector information, laws & regulations, practise of doing business there), could definitely be a useful tool for both intermediaires as well as SMEs. It would be wise to make the exact same information available to those business support structures which are already equipped with well-visited websites by means of modern technology such as realtime data access. The data could be shared and accessed via different channels at the same time. An example on national level is the content integration in our website of information of the government s Agency for International Business and cooperation (NL EVD Internationaal). Key issue is that the information would need to be accessible ie written in language of the entrepreneur. The success of such a database depends very much on this as well as the overall quality of the information. Providing an overview of business support services available in third markets from other MS states is not very useful, since business support is nationally orientated. For example, it is of little use for a Dutch entrepreneur to know about Pagina 4 van 6
the support services of the Spanish Embassy. However, available EU level programmes that SMEs can use for specific countries is useful to include into the database. Do you agree that a stock-taking of existing support measures in certain markets is necessary? In order to show possible gaps as well as overlaps, a stock-taking of existing support measures is indeed needed. In fact, this should have been the starting point before all kinds of new structures were set-up in third markets (such as the EU Business Centres) without the need and added-value being indentified nor proven beforehand. If the Commission is serious about the principles of complementarity and additionality, it awaits the results of this stocktaking before any new EU structures are set-up. In the same context, it is unclear how the already developed mapping exercise, commissioned by DG Enterprise to EIM and finalised but not yet released, will be taken into account. The absence of any reference to this extensive work in the EC consultation is inexplicable and calls for caution on the matter and concerns about the delays for EU SMEs being able to benefit from the study conclusions. Finally, the mapping exercise should be developed in cooperation with national authorities and public and private business support organisations to avoid duplication and ensure added value. Do you think that is a good idea to build on existing structures in markets abroad, such as established national bilateral Chambers of Commerce, to provide initial support to newcomers from anywhere in the EU? Or would you prefer new structures to be established to fill any gaps? It is indeed strongly preferred to build on existing Member State structures since they are proven to be more effective in servicing the needs of their national SMEs (they have an established reputation among national SMEs; SMEs know where to find them and they form part of the MS international network). Based on the mapping exercise, these should be improved if and where necessary. This is a far more effective use of public funds than building new structures that need to be built from scratch. Furthermore it avoids duplication of already existing activities and market structures would lead to a situation of competition and in some cases even unfair competition An EU structure should only be considered as a last option, when there is a significant market failure, net benefit can be expected from operating the structure and economies of scale warrant an EU approach, always adhering to the principles of additionality and complementarity. Do you think that a cooperation and division of labour between existing European support organisations in a given market - would be useful? To a certain but limited extent. Cooperation could be useful to share knowledge and contacts, to develop joint activities and to raise awareness about activities. - could be feasible? What needs to be done to bring this about? Existing EU level support structures such as the EU Delegation or EU Chamber Abroad could faclilitate cooperation.opening up existing Member State services in third countries to all EU SMEs does not seem feasible for the practial reason that international trade support is orientated nationally. In any case the EU Pagina 5 van 6
should not pay for it but the Member State that requires the support. Also linguistic and cultural issues play a role in this regard. Do you agree that cluster and network organisations can play an important role in helping SMEs internationalise and should, therefore, be strengthened? A cluster strategy towards internationalisation has been successfully implemented by many Chambers of Commerce: typically identify a limited number of competitive sectors in the region and develop a very focused internationalisation strategy for the SMEs within that sector, in partnership with technology institutes and universities. Do you agree with the guiding principles for new EU support activities as set out in the proposal? If yes, would you like to see other bodies (Member States) adhere to such principles as well? According to us, the guiding principles for EU level support should be: Complementarity and additionality Subsidiarity European added value Do you agree with the criteria for geographical priorities proposed? The criteria proposed make sense, but it is important to understand how they will be applied. It is essential to maintain a demand driven process, rather then top down. Do you miss any important aspects in the overall approach? EU support structures should be thoroughly evaluated before any new ones are set-up (with cost-benefit ratio and entrepreneur satisfaction as main indicators). For further information on the position paper: Mr. Rob Dikhoff, International Trade expert, KvK Nederland Tel. +31 70 3143449 E-mail: rob.dikhoff@kvk.nl Mr. Remco de Bruijn, European Affairs Manager, KvK Nederland Tel. +31703143409 E-mail: remco.de.bruijn@kvk.nl About the Chamber of Commerce The Chamber of Commerce supports entrepreneurs and enterprising people to realise their entrepreneurial ambitions. It offers independent and professional information and support to entrepreneurs accross the full range of entrepreneurship: from starting a company to international business. Furthermore, the business register of the Chamber of Commerce, with 2.2 million registered entities, offers reliable information on every company and sector. Finally, the Chamber of Commerce implements projects to promote a favourable business climate and stimulate the regional economy. Pagina 6 van 6