Global Review of Innovative Practices in Regional SME Exporting Strategies

This review explores innovative strategies in SME exporting and foreign direct investment attraction on a global scale. It delves into ways regions can strategically boost SME exporting, increase support, and implement outreach strategies for local entities to promote exporting.

• SME Exporting
• Foreign Direct Investment
• Regional Strategies
• Innovation
• Global Scale

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1. A Global Review of Innovative Practices in Regional SME Exporting Strategies and Foreign Direct Investment Attraction Innovate Michigan! Summit Heritage Room, MSU Kellogg Center Thursday, September 6, 2012

2. Introduction MSU CCED team conducted research to: Identify innovative practices in regional SME exporting strategies and FDI attraction on a global scale. Answer the following questions: How can regions act strategically to increase SME exporting? What are the ways to increase support for exporting in regions? What outreach strategies can be used by local entities to encourage SMEs to begin exporting? 9/6/2012 2

3. The Nexus Between Exporting and FDI Common goal shared by exporting and Foreign Direct Investment (FDI): Cause additional economic assets to flow into a region from outside that region. 9/6/2012 3

4. International Review of Innovative Practices in Regional Export Strategies Singapore, Germany, Canada, South Korea, Japan, Italy, Australia, Estonia, Azores Island (Portugal) 9/6/2012 4

5. International Review of Innovative Practices in Regional Export Strategies Singapore Singapore Economic Development Board (EDB), est. 1961, has international reach designed to attract foreign direct investment. Substantial FDI is attracted to Singapore by its open legal framework and transparent policies. The Singapore Ministry of Trade and Industry targets SMEs through SPRING Singapore and the Exporter Development Program. Serving as a trade hub and exporting its trade services, Singapore provides an example for successful exporting strategies. Using its geographic advantages, Singapore has become a multi- modal transportation hub/gateway to SE Asia. 9/6/2012 5

6. International Review of Innovative Practices in Regional Export Strategies Germany SME Exporting SMEs account for 98% of German exporters Transportation and manufacturing are biggest exporters. Exporting 47-50% of German GDP since 2007 (World Bank). Each region has a development bank that enables SMEs to access business development loans. Regional cluster internationalization strategies. Regional cross-border trade program between German North Rhine-Westphalia and Netherlands called INTER- NED. 9/6/2012 6

7. International Review of Innovative Practices in Regional Export Strategies Germany Regional Clusters Extensive utilization of clusters pushes Germany s strong export performance. Clusters provide a means by which smaller companies can attain a global reach. Cluster Objectives: Pool regional competencies. Initiate collaborative technology development. Carry out mutual networking. Learn from like clusters. Conduct training and educational activities for companies within the clusters. Generate international business. 9/6/2012 7

8. International Review of Innovative Practices in Regional Export Strategies Germany FDI Attraction Germany Trade and Invest Mission: Promote Germany as an investment location and identify investors. Established 2009. Advises and supports foreign investors. Assists German companies seeking foreign markets. Provides client-specific information and consultancy services. 9/6/2012 8

9. International Review of Innovative Practices in Regional Export Strategies Canada Export Development Canada Provides export insurance and intelligence on market trends and export strategies. Team Canada, Inc. Helps SMEs develop export plans, identify target markets, and plan export financing. Trade Team B.C. (Regional) Provides one-on-one coaching and foreign market contacts for SMEs. Helps SMEs prepare to enter the export market. 9/6/2012 9

10. International Review of Innovative Practices in Regional Export Strategies South Korea FDI attraction and export promotion in South Korea centers around the use of Foreign Trade Zones. Free Economic Zones within the FTZs provide incentives for foreign investments and advanced physical infrastructure, Also streamline customs procedures and export regulations for foreign companies. Invest Korea works with foreign investors as a one-stop service to establish foreign businesses in Korea, promoting regions to investors. 9/6/2012 10

11. International Review of Innovative Practices in Regional Export Strategies Japan Japan External Trade Organization (JETRO) offers companies a business matching database, Enables companies to search/find business partners online. JETRO works with regional governments to: Attract foreign investment. Develop business incentive programs. Promote the region overseas. Identify foreign investors. Train regional government personnel in investment-promotion. 9/6/2012 11

12. International Review of Innovative Practices in Regional Export Strategies Italy Italy aims to improve SMEs position in foreign markets By designating 3 regions and developing 8 regionally-focused support programs. Piedmont region (northwest Italy) is powerhouse performer. Home to 200 R&D centers and 12 locally-supported innovative clusters. Contributes 41% of all Italian exports and 32% of the national GDP. Australia TradeStart network assists export innovation in rural regions where: Exporters are growing at 3X the rate of their metropolitan counterparts and Exports account for one in four of all jobs. 9/6/2012 12

13. International Review of Innovative Practices in Regional Export Strategies Estonia SME development is hinged on regional development. Specific support measures are provided for each of the 13 regions. Estonian Exporters Database enables Estonian companies to provide foreign buyers information on the products the company offers. Foreign companies can use the database to pursue Estonian partners and joint ventures. 9/6/2012 13

14. International Review of Innovative Practices in Regional Export Strategies Azores Islands, Portugal Small chain of islands 1,000 miles off the coast of Portugal. Provides insights into the key drivers of internationalization for SMEs based in remote or isolated areas. Illustrates the importance of using a network of social ties supporting exports. Through communication between native SMEs and its emigrant communities. 6/14/2012 14

15. Review of Innovative Practices in Regional Export Strategies in the United States 9/6/2012 15

16. National Export Initiative (NEI) Announced by President Obama in 2010. NEI aims at doubling exports by the end of 2014. 2011 National Export Strategy was developed by the federal Trade Promotion Coordinating Committee with 70 recommendations in 80 priority areas. Only 1 of the 70 recommendations involves a regional approach. Four SME priority areas: 1. Identify SMEs that can begin/expand exporting. 2. Prepare SMEs to export successfully. 3. Connect SMEs to export opportunities. 4. Support SMEs once they find export opportunities. 9/6/2012 16

17. National Export Initiative (cont.) In preparing SMEs, it is recommended that export opportunities be promoted among competitive industry clusters. U.S. Small Business Administration (SBA) has provided 20 contracts to support SME counseling through regional innovation clusters. Next Step Identify clusters interested in follow-up engagement with export service providers. 9/6/2012 17

18. SelectUSA Created to showcase the U.S. as the world s premier business location a year ago (June 15, 2011). Provides easy access to federal-level programs and services related to business investments. Works with EDOs and stakeholders to help regions attract investments. Offers cluster analysis to regions and helps companies maintain their competitive advantage. Michigan Success Story In a collaboration with Michigan Economic Development Corporation (MEDC) and local agencies, attracted Canada-based bumper mfr. AGS Automotive s investment of $20 million in its Sterling Heights facility. Retained 50 jobs and will create 100 new jobs. 9/6/2012 18

19. U.S. International Trade Commission (ITC) Published 3 major reports in 2010 on role of SMEs in exporting and comparative analysis of exporting activities & barriers faced by U.S. and European SMEs. Small and Medium-sized Enterprises: Overview of Participation in U.S. Exports. http://www.usitc.gov/publications/332/pub4125.pdf Small and Medium-sized Enterprises: Characteristics and Performance. http://www.usitc.gov/publications/332/pub4189.pdf Small and Medium-sized Enterprises: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms. http://www.usitc.gov/publications/332/pub4169.pdf 9/6/2012 19

20. Brookings Institute U.S. Regional Strategies Minneapolis- St. Paul Export initiatives coordinated by a network of export service providers, including: Universities, chambers of commerce, local EDOs, private consultants, finance and legal advisors, logistics experts. Minneapolis-St. Paul marketing focuses on advantages in health and wellness sectors. Proximity to Medtronic, 3M, St. Jude Medical, and the Mayo Clinic. 9/6/2012 20

21. Brookings Institute U.S. Regional Strategies CenterState, NY (Syracuse area) Regional marketing efforts will be concentrated first on boosting exports to Canada. "Tag-a-long" program to link strong exporters with growing SMEs. One-stop, streamlined export assistance service. Build export awareness through marketing. 9/6/2012 21

22. Brookings Institute U.S. Regional Strategies Greater Portland, OR Export initiatives coordinated by: Portland Development Commission; Metro Regional Government; Port of Portland; Portland State University; Columbia River Economic Development Council; Portland Business Alliance. We Build Green Cities Marketing strategy targeting strong green technology sector for exports. 9/6/2012 22

23. Brookings Institute U.S. Regional Strategies Los Angeles Established the Los Angeles Regional Export Council (LARExC). Linking new exporters to old in one-on-one programs. One-stop website for regional export assistance: Los Angeles Region Exports. 9/6/2012 23

24. Trade Development Alliance of Greater Seattle Collaboration between Seattle and surrounding cities & ports. Goal Promote Seattle Region as international gateway and commercial center to foreign and domestic companies. Use its comparative geographic advantage. 9/6/2012 24

25. Georgia Port of Savannah-Atlanta Logistics Hub Georgia Center of Innovation for Logistics has held yearly logistics summits since 2010. Past keynote speakers have included the Governor of Georgia and representatives from the Georgia Ports Authority, U.S. Department of Commerce, Volkswagen, Coca Cola, UPS, Norfolk Southern, and GE Energy. Georgia is also home to: Georgia Tech s Supply Chain and Logistics Institute. Atlanta Technical College s Logistics/Supply Chain career training program. 9/6/2012 25

26. Review of Innovation in Bi-National Collaboration 9/6/2012 26

27. Innovation in Bi-National Collaboration North America Pacific NorthWest Economic Region (PNWER), 1991 Statutory, cross-border, public-private partnership chartered by 5 U.S. states and 5 Canadian jurisdictions. Washington, Oregon, Alaska, Idaho, Montana. British Columbia, Alberta, Saskatchewan, the Yukon, and Northwest Territories. Primary Goal: Share best practices and policy solutions to improve the regional economy. Greater Sault Region Sault Ste Marie, Michigan, USA and Sault Ste Marie, Ontario, Canada Signed Sister City Agreement signed on August 16, 2012 with collaborative economic development goals. 9/6/2012 27

28. Innovation in Bi-National Collaboration Europe INTER-NED Netherlands/West Rhine- Westphalia Targets German and Dutch SMEs and freelancers. Marketplace Baltic Region Cost-free Swedish import help desk provided by Association of Swedish Chambers of Commerce and Industry for Baltic Sea Region businesses. Germany and Korea Bi-national Cluster Cooperation Cooperation between complementary clusters in two countries. 1986 - Cooperative learning agreement. 9/6/2012 28

29. Innovation in Bi-National Collaboration Europe (cont.) Transitional Network of the Greater Region of Germany, Luxemburg, Belgium and France. Aimed at assisting skilled craftspeople adjust to administrative, legal, technical, linguistic, and cultural differences that accompany trade to bordering regions. Econet Platform: Austrian, Czech, Slovak SMEs Designed to foster innovation and competitiveness in region. Includes seminars and SME consulting. 9/6/2012 29

30. SME Market Drivers and Regional Environment Factors Spanish studies on embracing the positive impact of the national name brand of Spanish agriculture. Growth-related factors seem important as internal motivators. SMEs are also motivated in their internationalization decisions by factors within their environment. Social ties, supply chain links, etc . 9/6/2012 30

31. Collaboration in Bi-National Regions Four bi-national and multi-national trade assistance programs in EC. e.g., sterreich Service helps German SMEs comply with Austrian regulations. U.S. border and near-border EDDs often have inherent export and bi-national collaboration advantages. 9/6/2012 31

32. Exporting & FDI Innovative Practices MSU CCED Research Team J. D. Snyder Kenneth E. Corey Kevin Doyle Jeff Gepper Matt Snyder 9/6/2012 32

33. Thank you! We appreciate your feedback. J. D. Snyder Project Director MSU Center for Community and Economic Development SnyderJ6@msu.edu 517-353-9555 www.knowledgeplanning.org 9/6/2012 33