Did you know that small and medium-sized enterprises (SMEs) make up 90% of all global businesses, yet they only account for 35% of direct exports? This remarkable statistic highlights the significant opportunity SMEs have to expand their reach and impact on the global stage.
Venturing into international markets might initially feel intimidating, especially when faced with large corporations that have extensive resources. However, digital trade solutions are quickly changing the game by empowering SMEs to compete on a more equal footing. Modern technologies, including electronic trade documents, automated payment systems, and cloud-based logistics, are helping SMEs simplify processes, reduce costs, gain access to working capital and confidently reach new global customers.
In this article, we'll dive into how these digital tools can specifically support your SME’s growth, streamline operations, and unlock exciting new market opportunities. With the right digital strategies, SMEs can confidently step into the global arena and achieve ambitions previously thought unattainable.
Main fears of SMEs about their chances in global trade
Many small business owners, such as yourself, worry about the same thing when it comes to integrational trade: they think they lack the infrastructure and expertise to navigate international trade, not to mention compete with corporations.
Let’s address some of the common concerns.
- Traditional banking relationships often favour large corporations because handling lower-value transactions involves higher administrative costs for banks. That makes trade finance harder to secure for SMEs. Many SMEs struggle to obtain credit, trade insurance, or capital loans due to their limited credit history and smaller financial footprint.
EXAMPLE:A small textile manufacturer in Vietnam may face challenges securing a loan for bulk raw material purchases, limiting their ability to fulfil large export orders. - Complex paperwork and regulations can overwhelm smaller businesses. Each country has different trade laws, tax structures, and import/export requirements. Keeping up with regulatory changes can be overwhelming for SMEs because of their limited legal and administrative resources.
EXAMPLE: A family-owned spice company from India might avoid exporting because they believe managing customs documentation requires a dedicated compliance department. - High costs of cross-border transactions, compliance, and logistics. Global trade is expensive: shipping costs, customs duties, and compliance-related expenses. It’s a burden not all SMEs can afford.
EXAMPLE: An SME exporting handmade furniture from Poland to the United States may face substantial tariffs, expensive international shipping rates, and additional costs for ensuring compliance with safety standards. - Lack of technological expertise prevents SMEs from adopting digital tools needed for international trade. Small businesses often don't have the IT expertise or resources that large corporations have for implementing digital trade solutions.
EXAMPLE: A small-scale producer of organic skincare products in Brazil may struggle to integrate e-commerce platforms, digital invoicing, or blockchain-based supply chain tracking into their business operations. - Limited resources for market research and customer acquisition in foreign markets can make international expansion seem impossible.
EXAMPLE: A boutique skincare brand from Asia might think they need millions in marketing budget to reach customers in Europe.
But, despite these fears, digital trade solutions, like electronic trade documents, are making global trade more accessible to SMEs by reducing costs, improving efficiency, and simplifying compliance processes.
Digital trade tools: The great equaliser for SMEs
Luckily, modern digital solutions are able to transform these challenges into opportunities, changing the ways how SMEs do business internationally.
Here are only a handful of tools that are set to equalise the playing field in international trade for SMEs and corporations.
Digital payment solutions Traditional banks previously avoided SMEs because the costs of handling low-value transactions outweighed the benefits. But digitisation reduces these transaction and onboarding costs by as much as 60–80%, making trade finance accessible and profitable for banks and SMEs alike. Digital tools such as fintech solutions, blockchain-based smart contracts, and digital trade finance platforms simplify and secure transactions, enhancing liquidity and working capital access for SMEs.
Cloud platforms allow businesses to adjust their resources without significant upfront investments. For example, cloud-based supply chain management platforms help SMEs track shipments in real-time and better manage inventory. And cloud-based supply chain financing platforms can offer quick access to working capital.
Digital marketing platforms help SMEs to better coordinate their marketing campaigns in real-time and, as a result, reach a broader audience or target a specific niche. For example, SMEs can use AI-driven analytics to identify new market opportunities and predict demand trends.
E-commerce platforms are scalable tools that can help SMEs manage increases in online sales without compromising on performance. Marketplaces offer SMEs a global reach without needing a physical presence.
Electronic trade documents, such as e-invoices, electronic Bills of Lading (eBLs), and digital customs declarations significantly simplify international trade compliance. ETDs automate customs documentation and streamline border controls through automatic data extraction, enabling faster and smoother customs clearance.
With electronic document systems, SMEs can:
- Create, sign, and share trade documents electronically
- Track shipments in real-time
- Store all documentation securely in the cloud
- Automatically generate customs forms and certificates of origin
Benefits of using electronic trade documents for SMEs
For SMEs, using electronic trade documents instead of paper documents offers several benefits:
First, digitisation speeds up trade finance processes and makes them more efficient.
According to the ICC Global Survey on Trade Finance, 92% of respondents agree that digitisation will speed up trade finance processes in general. And SMEs can experience a 35% improvement in business efficiency and a 13% increase in international business if trade is digital.
Second, electronic trade documents reduce the costs and time associated with producing and handling paper documents. Global shipping costs would decrease by 18% and exports could increase by 13% a year if trade documents were digitised. And when it comes to saving time, e-invoicing cut trade invoice management and processing times from 40 to 13 minutes.
Third, electronic trade documents have more potential to prevent fraud. A reliable electronic trade system ensures the document can be distinguished from any copies and protects it against unauthorised alteration. On top of that, electronic trade documents offer better and safer storage, minimising the risks of important paperwork getting lost or damaged.
Next, DLT (Distributed Ledger Technology) platforms can help local banks expand SME access to trade finance and foreign markets. And, DLT platforms increase trust via transparent communication between SMEs (importers and exporters), banks, and other participants, along with reduced paperwork for all-parties involved.
Finally, the use of electronic documents reduces environmental impact compared to paper documents. By switching to digital documents (i.e. opting for eBLs and electronic document systems), companies can:
- Reduce paper consumption up to 80%
- Achieve CO2 emissions saving of 440,820 metric tonnes per year
- Become compliant with ISO 14001 and other environmental standards
This proves that digital trade solutions offer SMEs the opportunity to expand into international markets. All that is needed from smaller businesses is to get on board with digitalisation, and the sooner the better.
So, where do we go from here?
It’s a fact – SMEs play a vital role in the global economy, contributing up to 70% to employment and GDP.
For you, as an SME that is considering going global, the message is clear: you don't need to be a multinational corporation to succeed in international trade. With the right digital tools and a strategic approach, the world market is within reach. Infact, you have the advantage of being agile and able to move faster with the right digital tools.
Digital trade tools and solutions, such as electronic documents, automated payment systems, and AI-powered e-commerce platforms, can help SMEs compete in global trade even without the massive infrastructure investments and resources.
The key is to start small, choose the right tools, and scale gradually.