13. September 2007 - (Exportér) Small and medium-sized producers draw their attention to SNS countries, Russia and Ukraine.
Česká exportní banka realizes that small and medium-sized enterprises (SME) are the most sensitive to changes in the business environment as well as the most flexible as for their potential to response and growth. They play a key role in creating jobs and act as a social stability and economic growth factor. They are the stabilizing element for overcoming the impact of globalization trends connected with fast relocation of some mass productions to countries with lower labour costs.
However, small and middle-sized producers unlike large corporations face problems with financing their daily activities, mainly their development plans. Fear of higher risk of investing in such enterprises and limited amount of secured credits undoubtedly play its role. They face similar difficulties in their export activities. Nevertheless, it can be assumed that more than thirty thousand small and middle-sized enterprises are active in export. Their share in the Czech export since 1997 has been steadily increasing - also thanks to the developing SME support system - and at the end of 2006 it was 43.5 percent. As to the banking products, SME usually use short-term operating credits, overdraft facilities, SWIFT payments, drafts and letters of credit. Historically, Česká exportní banka is connected with financing large projects in countries with higher or high political, or territorial risk. However, it does not mean that its door is not open for small and middle-sized exporters and that the bank reviews the applications for necessary financing based on the allocation of a potential client to a certain segment. The quality of the presented export plan and a close co-operation of the applicant with the bank are always the decisive factors. ČEB motivation is to find with the exporter the most suitable and complex solution for financing of his contract. From the viewpoint of volume of signed contracts in the bank portfolio, approximately 6.5 percent are SME, from the viewpoint of drawn credits it is 5.5 percent. Nevertheless, the bank discovers that the clients are increasingly attracted to export financing that allow them to mainly export under favourable conditions and utilize their own resources better. The structure of the small and middle-sized enterprises applying at ČEB for financing of their export is interesting. Apart from small companies producing goods also for export and meeting the SME parameters such as number of employees, amount of registered capital, annual revenue and independence, there are also companies with a small number of employees engaged in engineering activities that are able to organize and ensure investment supply based on sub supplies of a number of subcontractors. In the ČEB history, one can find cases when after a few-year co-operation the revenue of such companies outperformed the revenue criterion. So far there has not been a company that would grow from a garage into a worldwide company. Nevertheless, the Czech Republic is not Silicon Valley. Naturally, exporting SME are and will be looking for customers of their goods mainly in the neighbouring countries. Apart from that, ČEB has recently witnessed a strong interest in financing exports to SNS countries and to Russian Federation and Ukraine in particular on which the small and middle-sized exporters also focus their attention. Small and middle-sized enterprises can choose as more effective way an expansion by investing in the target countries. ČEB has financed similar cases, too.
Vladimír Šon and Jan Stolár
The authors work in Česká exportní banka