EU-JAPAN NEWS March 2021

The covid-19 pandemic is a powerful trigger and accelerator of the digitalisation of business support services towards the internationalisation of SMEs, for example:

•The digitalisation of business matchmaking services ena-bles increased outreach to many more SMEs as compared to physical matchmaking. It also opens the door to a new profile  of  SMEs  which  would  have  never  participated  in  physical business missions outside the EU (covid-19 or not) by lack of time, money and staff. Hence, reaching out a hid-den part of the SMEs world with big potential.

•Virtual business matchmaking has become a crucial asset for SMEs to survive these economic difficult times without dropping  their  internationalisation  strategy.  It  enables  them  to  continue  building  international  partnership  as  it  reduces the transaction costs and save resources.

•Digitalisation also enables SMEs to evaluate more quickly and more regularly new markets and business oppor-tunities. They are then able to react more quickly to opportunities and threats with respect to changing market attractiveness. They can internationalise early, flexibly and fast, with fewer travel costs and less time.•Although the negative impact of the coronavirus crisis on businesses is a serious problem, it has also triggered a surge of new start-ups being set up in Europe, Japan and the US. As mentioned in a recent FT article (https://www.ft.com/content/3cbb0bcd-d7dc-47bb-97d8-e31fe80398fb), 10,000 new businesses were registered in September 2020 in Japan, 14% more than in the same month last year. France registered 84,000 new businesses in October 2020, up 20% on the same month last year and the highest ever recorded.

•Given the major trend for EU-Japan business cooperation in third markets, digitalisation facilitates tri-lateral business matchmaking between the EU, Japan and third countries. They can more easily go beyond bilateral cooperation between the EU and Japan, and hence project EU-Japan business partnership to third countries, e.g., Asia or Africa.

Digitalisation and internationalisation go hand in hand to provide opportunities to many more SMEs, for internationalising in a cheaper, faster, greener, more global and flexible ways, and delivering higher productivity compared to the ‘usual’ physical practice.It is dramatically changing patterns of entrepreneurial opportunity pursuit, value creation, innovation in the economy, and internationalisation. The 4th ‘industrial revolution’ is upon us.

Does it mean that the above digitalisation assets for building international business partnership will make obsolete the regular physical journey? Probably not, as no matter how easy and effective it is to talk digitally, there is something else that face-to-face communication brings. Business is about building relationships and trust. It has an emotional dimension that a real-word event can – for the moment – enable more easily than a virtual one.

The key challenge is likely to be how best to articulate the assets of digitalisation with the ones of the physical way. Perhaps  via  a  double  step  approach,  with  first  a  large  digital  business  matchmaking,  followed  by  a  much  smaller  physical one for finetuning. 

Dr. Philippe de Taxis du PoëtManaging Director, EU-Japan Centre for Industrial CooperationMinister Counsellor, Delegation of the EU to Japan