Different types of exporting firms require different types of trade promotion services

Publicly funded trade promotion services appear to play an important role for the inter­national­isation of small and medium sized enterprises (SMEs); however, it is difficult to evaluate the impacts of trade promotion. Evaluations often focus on a population of firms that have been in contact with organisations offering trade promotion services. This is problematic for a number of reasons. Even if firms that have used the services are found to have established new export relationships or increased export volumes, it is difficult to establish causality as trade promotion is, at least to a certain extent, demand driven. Moreover, new trade promotion services and initiatives are often targeted towards countries that are expected to become important export markets.

This report analyses trade promotion from another perspective. Instead of studying a population of firms that have used trade promotion services, we have chosen to study a population that has begun exporting to a selected foreign market during a given year. The region selected was the Asian region, as defined by Statistics Sweden, which includes Southern Asia and the Middle East. The study is focused on the role trade promotion has played for all the SMEs from a selected Swedish region (the four southernmost counties) that started exporting to a market in the Asian region during 2013. For our analysis we used a combination of official statistics from Statistics Sweden, a telephone survey (conducted by Sifo) and interviews with firms (conducted by our research team). The main issues studied were the firms’ experiences of trade promotion services, their views on and knowledge of available services and, finally, information on how they came into contact with customers on the new export market.

Publicly funded trade promotion plays a relatively small roll

The results of our analysis show that publicly funded trade promotion services were not of great importance for the southern Swedish firms that began exporting to the Asian region during 2013. Only eight of the 51 firms that took part in the survey had used the services of a publicly funded trade promotion organisation when they began exporting to the region. Swedish embassies and consulates were the most common public organisations contacted. Just two of the firms had used Business Sweden’s services (formerly the Swedish Trade Council).

We found that that majority of the firms in the population studied were aware of many of the available publicly funded trade promotion services. Half of the firms had used publicly funded services at some point. Many of the firms had also used private trade promotion services. We also found that many of the firms studied were relatively experienced in international trade, with previous export to several different foreign markets. This level of experience may explain their limited use of trade promotion services in establishing export to Asia in 2013.

In general the firms believe trade promotion services, in particular those offered by the Chambers of Commerce, to be of a high quality.

The twelve semi-structured interviews conducted revealed greater differences among the firms. The majority had previously used a variety of trade promotion services, but their needs and patterns of usage varied. While some were well informed and had experience of the different publicly funded trade promotion services, there were others that had not used any public services at all. The firms owned by multinational companies were generally relatively uninterested in trade promotion services because they already had good access to international contacts through the parent company.

Some of the common themes that arose in the interviews concern the trade promotion services’ quality. A number of firms report both positive and negative experiences. The personal qualities and abilities of the trade promotion organisations’ personnel emerged as a critical factor. Many firms also emphasised the importance of exhibitions and trade fairs for making new customer contacts.

Recommendations: further evaluation of trade promotion

• The role of service sector firms in Swedish exports merits further analysis, more specifically the role of retail and wholesale firms as well as the transport sector in the export of goods.
• A comparative analysis of how small firms begin exporting to neighbouring countries (in the Nordic region) and to relatively distant markets would shed more light on the importance of trade promotion in different stages of firms’ internationalisation.
• Analysis of the impact of trade promotion should span over several years to better assess the endurance of trade relationships over time.
• There is a need for quantitative analysis that combines official statistics from Statistics Sweden with data on which firms that have used the services of trade promotion organisations

Recommendations: the design of trade promotion services

• The portfolio of publicly funded trade promotion services is limited. Therefore it is relevant to target resources where they are most needed, and where they can be expected to be most effective. SMEs that have exported to foreign markets at some time, but without succeeding in maintaining the export relationship (sporadic/­temporary exporters) should be prioritised.
• Human resource management is critical to the quality of trade promotion organisa­tions’ services, as the individual staff members’ abilities affect the quality of services. It is important that resources are dedicated to staff training and competence develop­ment.
• The publicly funded trade promotion organisations should seek greater cooperation with non-state actors, such as the Chambers of Commerce.
• Exhibitions and trade fairs are important avenues for firms to establish contact with customers and other partners. Publicly funded trade promotion could play a greater role here, for example by creating platforms to market Swedish areas of strength and competence.
• The internet is playing an ever greater role in marketing, even as regards international trade. Publicly funded trade promotion could contribute to a faster internationalisation of SMEs by offering support for the development of export-oriented web pages.