Reflections on the document “Small Business, Big World – a new partnership to help SMEs seize global opportunities” - a view from NMS Magdolna Sass Institute of Economics of CERS HAS and ICEG EC, Hungary

Background 1 SMEs in NMS At the beginning of transition: a relative absence of SMEs; deregulation and support programs: a quick growth, though still lower share compared to EU-15 Mainly small and micro enterprises On average less developed in human resources (e.g. language, managerial) Still many „too weak-too small-too isolated” Lower level of internationalisation compared to EU-15, though some successfully internationalising, even „born globals” in innovative sectors Institutional framework for support, incl. for internationalisation less advanced, though differing from country to country Cases of overlaps, parallel structures, complicated organisational systems and irrelevant programs Missing evaluations on existing support schemes

Background 2 A tale of two companies An IT company („born global”) Established in 2001, 40 employees Software and related hardware production Quickly growing, esp. exports (Deloitte Technology Fast 50 in 2007) Since 2006: also FDI Affiliates in EU and in Russia, local partners in many Asian and African countries Institutional support minimal, „problems” in foreign markets solved mainly through hiring experienced personnel with local knowledge (CE, Russia, Africa) An innovative company in the medical precision instruments sector 30 employees, established in 1990 In some small market segments among the top 5 companies worldwide Around half of its exports go to the EU, the other half to many countries in the American and Asian continent Used support extensively from ITDH and MEHIB for outside-EU markets Barriers to internationalisation: language (Japanese and Chinese), info on markets, lack of foreign partners and lack of financing Sector specific: import licences and need for local permits (Argentina, Brazil, USA, Canada, China, Japan)

Dilemmas 1.The present „labyrinth” of support: reason and room for cleaning up for giving better access to SMEs to support and to information on support and for a more efficient use of public money 2.Delicate issues for the „cleaning up” exercise: The problem of vested interests The importance of the bottom-up approach Targeting versus general support

Dilemmas cont’d Cooperation versus competition: differing interests of member states in 1.Geographical scope 2.Sector scope (if any) 3.Size/extent of support 4.NMS „specialties” - an illustration Costliness and riskiness of outside-EU-markets (though quicker growth and opportunities)

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