Factors affecting internationalisation of SMEs (Insufficient access to…
Factors affecting internationalisation of SMEs
Social-cultural factors and intentions
Starting a new business bring prestige and generates respect.
However, SMEs owner's fear of failure prevents them from venturing overseas.
Globalisation and competition
Free trade agreement (FTAs) between countries will open up business opportunities for SMEs that plan to venture beyond home countries.
Accessibility of information via internet for market information. Eg In malaysia, if you set up a certain type of company, 50% of the employees must be Muslims.
Change in foreign country regulations. Eg India implemented GST (1 July 2017)
Unclear regulations in the neighbouring countries
Singapore has been so structures that we no longer know how to manipulate in an unstructured environment.
Our surrounding countries lack proper business rules and regulations.
Manpower, Skills and Motivation
Employee turnover has been so high that there are no sufficiently skilled manpower SMEs can use for overseas expansion.
Highly-skilled talents are too expensive for SMEs to hire.
Singaporeans also expect to be paid more for staying abroad as it is deemed as "hardship".
Insufficient access to market information
SMEs traditionally have limited access to information on new or overseas markets and business developments. (Eg: cultural understanding, or unsaid culture that cannot be found on the internet)
Countries attractive for expansion has limited validated information.
SMEs owners lack of knowledge and data overseas, hence will need local partners for joint ventures.
SMEs do not have contacts or connections as they have been focused only in local markets.
Language barrier in Japan, Korea or Thailand
Products and services that comply to Singapore standards are not recognised in many countries. Eg Tax compliance, Accounts Reporting, Hiring, Pollution, Medical, etc
Access to financing
Liberalisation of financial sector makes it easier for SMEs and ups to take loans from banks and financial institutions.
All ASEAN countries with the exception of Brunei and Singapore have encountered at least 1 political upheaval in the last 10 years.
Brand acceptance in a foreign country makes or breaks the business.
Singapore brands are dependent on loyal customers. Unlike global and international brands that spends alot on marketing, branding and image
SMEs that venture overseas need to build a brand.