Tapping into the global market isn’t just for big-name giants like Amazon, Apple and eBay anymore. Small and medium-sized enterprises are being encouraged to get into the export game as globalization becomes less standardized and more specialized.
Earlier this week, Alibaba Group Holding Ltd. held its inaugural Gateway ‘17 confab in Detroit. In what was considered a move to tap sellers in the largely untapped portions of the U.S. retail market, the event drew out about 3,000 small business owners, entrepreneurs and farmers, all interested in learning more about exporting products. The conference touched on important insights about Chinese consumers, profitable industries and ways to find top-notch suppliers.
While China is already the world’s largest retail market (a $4.89 trillion market); the U.S. comes in at a close second ($4.52 trillion). According to co-founder and vice chairman of Alibaba, Joe Tsai, “growing demand for high quality consumption allows American businesses to play a major role in China.”
In January, Jack Ma, CEO of Alibaba, promised President Trump that bringing more U.S. sellers into the Chinese market would aid in the creation of 1 million jobs over the next 5 years, a goal that some experts have called implausible. On the heels of Amazon’s push into the brick-and-mortar world, Alibaba remains optimistic. The company plans to continue bridging the gap between offline retail and online shopping using its so-called concept of “New Retail” that allows traditional niche retailers to evolve across wider networks. Alibaba currently has 20,000 California small businesses alone selling through the site.
Ma’s advice to small business owners looking to export is three-part:
- If you’re a small business owner, don’t hire the best in the field. Hire those with the potential to become great. According to Ma, as a small business owner, insisting on hiring the cream of the crop is like putting a Boeing 737 engine into a tractor. Instead he recommends focusing on hiring the next generation of great leaders.
- Expand your business into the Chinese market. Ma suggests that in the next 30 years, Chinese markets will dominate American markets, and those who don’t embrace it will be left behind. While the focus abroad shifts to customization and personalization, now is the time to secure your niche in the global market.
- Focus on integrating mobile and online technology in your business efforts. Ma says the key to small business success, especially if you’re a specialized business, is integrated technology that allows you to compete on a much larger global scale through e-commerce.
In an effort to bolster the export efforts of SMEs, earlier this month the U.S. Small Business Administration (SBA) announced an $18 million funding opportunity to support export growth. The funding comes through the SBA’s State Trade Expansion Program (STEP). The program is designed to expand the base of U.S. small businesses that become exporters by making the process of exporting goods easier for small business owners.
Small businesses receiving funds through STEP have opportunities to meet foreign buyers face-to-face at trade shows or on trade missions, and they have access to the SBA’s export loan guarantee programs. Loans up to $5 million are available to help finance the working capital needed to facilitate the production and completion of export orders.
In fiscal years 2011, 2012, and 2014, recipients of STEP awards reported a strong return on investment: businesses generated an average of $22 in export sales for every $1 they were awarded.
If you think your small business is ready to go global, but you’re not sure where to start, contact one of the SBA’s Export Finance Managers located at 21 U.S. Export Assistance Centers across the country.