Exposure to globalization can fuel business expansion or threaten it, depending on strategy. Those potentials and threats, however, expand beyond foreign exchange challenges. PYMNTS takes a look at globe-trotting SMEs to discover the trends of small businesses' global dealings, from business travel to cross-border trade.
71% of U.S. SMEs look to trade to boost the economy, said FedEx in its latest Trade Index. International trade is seen in a positive light for smaller businesses in the country, with 77 percent reporting a positive view of it, researchers said. For companies already trading internationally, 90 percent view the practice as a positive one. The majority of SMEs agreed that boosting international trade will bring more jobs to the U.S. According to FedEx Services Executive Vice President Raj Subramaniam, the data shows that, even with ongoing debate about the consequences and benefits of cross-border trade, U.S. SMEs are on board with the tactic to boost national economic health overall.
55.4% of business travel agents said their clients aren't using Airbnb and similar alternative accommodation services, despite Airbnb recently launching its B2B solutions, as well as reporting a steady increase in corporate use of the on-demand tool. The statistic provided by Travel Leaders Group could suggest that, while corporates are willing to use Uber, Lyft and other ground transportation tools other than taxis, when it comes to accommodation, the risks might just be too high. Researchers pointed to the challenge corporations face when not only updating their travel policies for employees but also ensuring proper duty of care for their employees using alternative services, which may have different or lacking insurance policies.
46.2% of Singapore SMEs report forwards usage to mitigate against FX risk, beating out Hong Kong SMEs at 37.2 percent. Researchers at East & Partners said the data highlights Asian SMEs' superiority over SMEs in other markets, like North America and Australia, in their use of FX hedging tools, like forwards and options. While globalization is demanding that smaller companies pay closer attention to their FX exposure and risks, researchers pointed to a fragmented FX services market as one reason why uptake of these tools could be lagging. Luckily, East & Partners said, there is evidence that SMEs are beginning to take a more proactive approach to their FX strategies.
A 29% decline in foreign currency purchase value by U.K. SMEs this year signals bad news for U.K. small businesses, who have been disproportionately hit by the weak pound. New analysis from FEXCO Corporate Payments said that a 29 percent decline between July 2015 and July 2016 also pairs with a 7 percent decline in the number of foreign currency purchases made. While there was some recovery in August figures, analysis said the data suggests SMEs are slowing down their import spending — but only among smaller businesses. Larger corporates landed increases in both the number of foreign currency purchases made in July, as well as an increase in the value of those purchases, suggesting larger U.K. corporates aren't shying away from importing practices. FEXCO said that Brexit's impact on the declining value of the British pound has led to a higher cost of importing for U.K. firms, which, according to the research, disproportionately effects smaller companies.
26% of EU SMEs plan to boost investment in digital tools next year, found a new report released by Schroders U.K. Globalization and expansion across borders demands a digital workplace for many SMEs, but researchers said there are some major concerns these businesses have about going digital. The first, unsurprisingly, is data security, while cost to implement a digital workplace is also a struggle. Half of SMEs surveyed said they're moving towards mobile working, suggesting that small businesses are beginning to explore a more fluid workspace across physical location.