Trade has existed for millenniums. In the past, trade routes and various value exchange were used to facilitate trade. In today’s borderless and digital world, having the right product on the right platform with the right marketing budget translates to success. Cross border trade, hailed as a catalyst for economic growth and development, is no hassle for large corporations, but it can be an insurmountable hurdle for micro, small and medium-sized enterprises (MSMEs) to overcome.
No Money, More Problems
Unlike major corporations, MSMEs are challenged primarily by their need for capital for cross-border trade activities. From leveraging their supply chain, manufacturing sufficient stock for fulfilment, acquiring the correct product safety certifications, and the plethora of documents required for exports, MSMEs struggle at every stage to obtain sufficient capital to keep business afloat.
While the cost of doing business can be lower domestically, the high cost associated with cross-border trade causes MSMEs to shun this potential growth spurt for their business. This challenge is compounded when traditional financial institutions perceive international trade ventures to be high-risk, making it harder for smaller businesses to receive the loans with their limited credit history without collaterals. Currency fluctuations and exchange rate risks further exacerbate the financial uncertainty faced by MSMEs.
Attracting & Keeping Talent
Regardless the size of your business, you’re constantly competing with major corporations for the same talents in the industry. Job openings for talents with cross-border experiences and connections pay better in larger corporations, and many MSMEs will find it harder to attract and retain the right talent for their business. This continuous brain-drain can set the enterprise backwards by years, increase manpower costs and cause disruption to the business in unexpected ways.
Talented individuals that can deliver proven results within your organizations will quickly migrate to major corporations for bigger and brighter career prospects. This possibility makes it hard to keep talented workers and when these employees leave, they leave a big gap in your business that may take months to close. Such gaps set productivity back, and leaves existing projects hanging, often without proper handover procedures, which further compounds this challenge.
Regulatory Compliance
Navigating the complex web of regulations and compliance requirements in cross-border trade may sound overwhelming for the average MSMEs, especially when different countries have different policies and procedures enforced. This undertaking would put a dent in resources and manpower, limiting what MSMEs can decipher, apply, and comply with, with huge repercussions in the event of failure.
Inability to meet regulatory requirements will cost the business time, fines, and legal consequences – more barriers that limit access of businesses into foreign markets. For businesses in the halal segment, international trading will also require different Halal certifications that the enterprise may not have the knowledge to navigate. As a result, the business would often steer clear of global opportunities, limiting their prospects to their respective domestic markets.
Logistics & Localization
Apart from the challenges above, MSMEs also face logistical complexities and localization of products. Transportation, warehousing, distribution and coordinating the movement of shipments across borders will require meticulous planning and often incur hidden costs that MSMEs may not have budgeted to address. Additionally, business owners may not be experienced themselves to engage intermediaries from freights forwarders, customs brokers, and logistics providers in a cross-border setting.
Launching a product in a new market that caters to local taste and nuances may take years of marketing research and R&D. Without a wholesaler partnership in the country to assist in these insights, businesses may be limited in what they can produce for exports. Marketing your existing products without modification may cap the revenue potential of your exports. As such, it is often recommended to tailor and adapt your products to resonate with foreign audiences. Additionally, MSMEs also do not have market insights that can help them compete equally against local and established players.
In conclusion, while cross-border trade offers immense opportunities for MSMEs to expand their reach and diversify their revenue streams, it also presents formidable challenges that must be addressed proactively. From regulatory hurdles and financial constraints to logistical complexities and market access barriers, MSMEs face a myriad of obstacles when venturing into international trade. By leveraging strategic partnerships, embracing digital innovation, and accessing targeted support services, MSMEs can overcome these challenges and unlock the full potential of cross-border trade to drive growth, innovation, and sustainable development.
At DagangHalal, we’ve successfully empowered more than 14,000 buyers and more than 9000 suppliers to take their Halal offerings to a global level. Through our systematic approach, we’ve enabled simpler Halal certifications and verifications, customer onboarding, as well as marketing and trade across borders with minimal risks, and best of all, affordable to even the smallest of ambitious entrepreneurs. Let us be the light to hold your hand in your cross border endeavors.
To find out more, or just pop by for a FREE Quote – visit www.daganghalal.com
