Survey of Greek SMEs: Extroversion (April 2018)

SMEs Extroversion: The challenge of converging to the EU standards

The business climate in Greece posted a remarkable improvement in H2.17 as the SME confidence index rose to 10 points (from -4 points in the first half of 2017 and the low of -10 points in the second half of 2015 ). Manufacturing continues to be the sector that stands out positively as extroversion proves to be the driving force behind its growth, with export-oriented small and medium-sized manufacturers accounting for 31 per cent of the sector (vs 26 per cent in 2012).

However, Greek SMEs present a significant gap in extroversion compared to their European counterparts, with only 11 per cent of their sales being exported (vs an average 18 per cent in the EU).

The survey conducted by NBG on a sample of 600 companies showed that one out of three Greek SMEs with potential export activity (mainly manufacturing and wholesale trade) is already export-oriented. It is notable that more than ½ of export-oriented SMEs have managed to increase their exports during the crisis.

12 per cent of SMEs (covering 21 per cent of the sector’s sales) are the most competitive part of exporters, as their strategic priority over time has been to gain market share in foreign markets, and they have managed to boost their extroversion during the crisis (with exports now accounting for 34 per cent of their sales, as compared with 19 per cent in 2008) by applying the following practices:

• Strong targeting of efficient cost management (stating that they have gained advantage in terms of wage and energy costs) and the adoption of highly competitive packaging (implying high investment in marketing, branding and promotion).
• Focus on leveraging clusters, exploiting the benefits of networking as well as the broader synergies they offer.
• Priority placed on the developed markets (Mainly Western Europe and the US) , where our survey results have shown that higher profit margins are achieved.

The NBG survey identified the share of SMEs with significant potential to increase their exports. Specifically, there is (i) an 11 per cent share of SMEs (covering 17 per cent of sales) that presents a certain amount of export activity, and (ii) a further 15 per cent share of SMEs (accounting for 12 per cent of sales) which, although it did not export during the crisis, says it has put export activity as a strategic priority over the next five years. Consequently, gradual convergence with European averages of extroversion is feasible if there is a consistent, rapid and coordinated strategy of deploying the abovementioned best practices by this portion of “potential strategic” exporters. At the same time, in the course of pursuing this goal, mergers between SMEs and strengthening of access channels to liquidity sources will probably be required.