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EU-JAPAN NEWS October 2020
In Europe, there are 25 million SMEs, employing around 100 million people, and accounting for more than half of Europe’s GDP. In Japan, there are 3.8 million SMEs, accounting for 99.7% of the total number of companies. In both Europe and Japan, SMEs are essential in sustaining the economy, and global markets are a potential important source of growth for them.
SMEs are in the heart of trade policies. Together with large multinationals, they are de facto on the front line for utilising the EPA. The priority for us at the EU-Japan Centre for Industrial Cooperation is making the EPA, as well as the SPA and Connectivity Partnership work for businesses, ensuring that they reap the maximum benefits from these agreements. This SME dimension is pivotal for the Centre given the growing importance they have in exporting in terms of standard metrics but also in respect to several key indicators such as export competitiveness, digital intensity of their exports, greenhouse gas emissions and jobs supported. For example, according to a recent report1, the number of EU exporting SMEs has grown steadily over time. More than 700,000 EU27 enterprises sold goods outside of the EU. Out of all these enterprises, around 615,000 were SMEs. They exported goods worth €476 billion, which represented 28% of the total value of extra-EU exports. The growing number in the EU and in Japan of young, tech-savvy SMEs can help more established industrial firms to adapt their business models and develop new form of work, business cooperation and innovation for the digital age. These SMEs are not only bringing innovative products and processes. They also are a good lever for improving the structure of our industrial ecosystems2 encompassing all players operating in a value chain e.g. from start-ups to the largest companies, from academia to research, service providers to suppliers.Finally, may I highlight and warmly welcome Mr. Yasuo Tanabe, the new Japan-side Managing Director of the EU-Japan Centre. I am convinced that his vast experience and proactiveness will bring much added value to our joint Centre. I invite you to read his article on page 2. Happy and honoured to work with you, Mr. Tanabe!
SMEs are in the heart of trade policies. Together with large multinationals, they are de facto on the front line for utilising the EPA. The priority for us at the EU-Japan Centre for Industrial Cooperation is making the EPA, as well as the SPA and Connectivity Partnership work for businesses, ensuring that they reap the maximum benefits from these agreements. This SME dimension is pivotal for the Centre given the growing importance they have in exporting in terms of standard metrics but also in respect to several key indicators such as export competitiveness, digital intensity of their exports, greenhouse gas emissions and jobs supported. For example, according to a recent report1, the number of EU exporting SMEs has grown steadily over time. More than 700,000 EU27 enterprises sold goods outside of the EU. Out of all these enterprises, around 615,000 were SMEs. They exported goods worth €476 billion, which represented 28% of the total value of extra-EU exports. The growing number in the EU and in Japan of young, tech-savvy SMEs can help more established industrial firms to adapt their business models and develop new form of work, business cooperation and innovation for the digital age. These SMEs are not only bringing innovative products and processes. They also are a good lever for improving the structure of our industrial ecosystems2 encompassing all players operating in a value chain e.g. from start-ups to the largest companies, from academia to research, service providers to suppliers.Finally, may I highlight and warmly welcome Mr. Yasuo Tanabe, the new Japan-side Managing Director of the EU-Japan Centre. I am convinced that his vast experience and proactiveness will bring much added value to our joint Centre. I invite you to read his article on page 2. Happy and honoured to work with you, Mr. Tanabe!
Philippe de Taxis du PoëtManaging Director, (EU-side DG GROW),
EU-Japan Centre for Industrial Cooperation
Minister Counsellor, Delegation of the EU to Japan
[1] https://trade.ec.europa.eu/doclib/docs/2020/june/tradoc_158778.pdf
[2]https://ec.europa.eu/info/sites/info/files/communication-eu-industrial-strategy-march-2020_en.p
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SME INTERNATIONALISATION AND DIGITALISATION 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 Discover the full version
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