Think small to become bigger

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At the end of February, the European Commission made a positive evaluation of its strategy Small Business Act (SBA), launched in 2008 with the motto “think small first”. It aimed to strengthen small business role as the engine for economic growth and employment. Among other things, the Commission pointed out that 100,000 SMEs had profited from its special financial tools, payment deadlines had shortened and administrative processes had also been reduced, while public tenders were more accessible for SMEs. Despite the positive attitude from the always optimistic European Commission, the reality SMEs are facing is different everywhere in Europe. Forecasts are not promising, and even less so in Catalonia. All of this requires our companies to adapt to a changing situation.

In the face of the slow recovery of the Spanish market, SMEs are obliged to go abroad. Producing in our homeland is popular again because of the oil price increase, and thus transport costs. In addition, some emerging markets lost competitiveness, due to greater country risk in the Maghreb region and the increase of labour costs in China. This, however, does not excuse us from looking for new markets. The evolution of Catalan exports, which increased by 18% in 2010, shows that recovery is possible thanks to external markets. Unfortunately, some companies with competitive products and foreign solvent clients do not get enough credit for exportation, due to the delicate situation of our financial sector.

The controversial reform of savings banks, going beyond the effects on the financial sector and some territories, does not precisely benefit business growth. Credit restrictions continue and there is little sign of an improvement forecast, despite recapitalisation promises coming from Madrid and even from Qatar. If the financial entities strengthen their ‘core capital’, our companies should do so as well. Times of easy and cheap credit are history, maybe forever, and we need to strengthen our own resources, through mergers, risk capital, alliances or trading on the stock exchange. A recent study displayed that 800 businesses might fit into the new Alternative Stock Exchange Market (MAB), although only 13 actually trade there, only 2 being Catalan. 

The public administration should favour company adaptation to this new situation, by fiscally fostering business capitalisation and promoting SMEs competitiveness. We need specific regulation for SMEs. It should be easier, starting by the collective agreements on wages and working conditions. Administrative simplification, internationalisation, capitalisation and innovation are key elements to be able to, while thinking small, make our country bigger.

 

Josep González

President of PIMEC (Catalan SME Association)

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