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Small Businesses Should Go Abroad

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As the global economy continues its decline, small and medium-sized businesses should expand their markets internationally, according to two economic experts.

Maurice Strong, executive director of the United Nations Environment Programme (UNEP) and former secretary general of the United Nations Conference on Environment and Development (UNCED), told that the way out of this economic crisis is to fight protectionism and create new opportunities for trade and investment.

"We should not to shrink into our shells. The US and China have both taken proactive steps to get our economies moving again and we should focus on making sure our economic relationship is fair and open," Strong said.

He offered high praise to the measures taken by the Chinese government to combat the financial crisis. He also called for greater efforts from both the US and China to help businesses - especially small and medium-sized enterprises - overcome the negative impacts of the financial crisis.

With domestic markets shrinking, efficient small and medium-sized businesses in many countries are shifting their focus to the international market. The crisis has created a good opportunity for them to expand and merge with other companies.

"The devaluation of capital in the stock or credit market means well-run companies can spend less money to buy another one," Strong said. "It's a good opportunity for small enterprises because they only require much less capital than before to reach their market aims."

Looking at the latest GDP forecasts and a massive credit expansion, it seems for now that China's economy has reduced its interdependence on western economies. Although enterprise bankruptcy happens all the time under the current economic environment, many businesses have still managed to survive and even grow.

Wang Huiyao, vice chairman of the China Western Returned Scholars Association (WRSA) and chairman of the WRSA Chamber of Commerce, noted that China's quick response to the financial crisis has achieved commendable results so far, with data indicating a better-than-expected recovery and development of China's economy.

"China cannot wait until Europe and the US recover, because that will be too late," Wang told "Chinese survivors in the international markets understand that the good times of US and European big buying are over."

According to Wang, China shouldn't wait for others to pull it up – it must rely on its own potential by stimulating domestic consumption, restructuring its economy, and shifting the economic growth pattern.

"China was hit, but has since strengthened, and the country now feels the impact of economic stimulation," he said.

He emphasized three advantages for small and medium-sized enterprises in going global: the financial crisis has led to the shrinking of foreign assets; all countries are actively seeking to improve their economic status and therefore attract investment; and the financial crisis has increased the demand for low-priced goods from China.

Wang said it's important for Chinese companies to be careful when expanding internationally; however, "China is virtually the only big economy that is still growing. To some extent, it's the right time for Chinese companies to go abroad."

( May 31, 2009)