Nearly half of local SMEs have no plans to take their businesses abroad – here’s why

Nearly half (45%) of local SMEs are planning on staying local, while only 14% are looking to internationalise
QBE Insurance Singapore

Almost half (45%) of all small and medium-sized enterprises (SMEs) in Singapore have no plans to take their businesses overseas and plan to stay local – at least in the near future.

Meanwhile, only 14% of local SMEs have an intention to expand abroad, revealed QBE Insurance in its annual research survey report released today (Jan 29).

The survey was conducted in September last year by global business intelligence firm ORC International, on behalf of QBE Insurance, and involved more than 400 SMEs across various industries here.

Having insufficient funds to expand overseas (42%) and unfamiliarity with the standards and processes of foreign markets (38%) were primary concerns for SMEs against internationalisation.

QBE Insurance Singapore

Other concerns included: the level of competition in other markets, regulatory and legal compliance as well as political instability.

“There are a number of measures in place to help these firms better understand the complexities of foreign markets,” said chief executive officer of QBE Insurance Singapore Mr Karl Hamann.

“These include multi-country insurance protection plans that can mitigate their risk when expanding and help local firms capitalise on opportunities to grow their businesses and further contribute to the economy at home”.

According to QBE Insurance, the lack of appetite for international expansion can also be explained by the improving perception of Singapore’s economy driving belief that sufficient growth can be attained locally.

Half of the SMEs surveyed showed an optimistic outlook for the local economy in the next 12 months, while only 24% of them believed that the economy would worsen in 2018.

QBE Insurance Singapore

The survey also found that a whopping 95% of SMEs this year currently use, or intend to invest in digital technologies.

Of those who already carry out at least one business process mainly online, 47% believe that using technology helps to make their business more productive, while 43% say that it allows them to provide better customer service and reach out to more customers.

But while digitalisation appears to be a key area of focus for local SMEs, there are still issues that need to be tackled.

With the growing risk of cyber threats plaguing the region, it is frightening that 35% of smaller SMEs admitted to having no cyber protection at all.

Other issues include the perceived high cost of investment (43%), the lack of necessary skills to fully leverage new technologies (39%) and cyber security (23%).