BusinessEurope says Europe should encourage SMEs to achieve their growth objectives - On 21 November, BusinessEurope, the Brussels-based organisation representing European employers, published a study into small and medium-sized enterprises (SMEs), which employ around two thirds of European workers. This study is called “SME Action Day: Thinking Big!” and is based on the results of a survey carried out by KPMG consultants at 840 enterprises throughout Europe. According to the study, one out of two SMEs had ambitious growth targets and intended to increase their turnover by more than 10% over' the next three to five years. More particularly, 30% of the SMEs wanted to increase their growth rates by between 11% and 20% and one out of five wanted to increase this rate by more than 20%. At the same time, half of the SMEs are pessimistic about the future and forecast growth of less than 10%. A fifth of the SMEs forecast growth of less than 5%. Domestic growth (development of new products and services, expansion towards new domestic and foreign markets) is perceived as being more important than external growth (creation of joint ventures, mergers and acquisitions). Taxes and administrative charges are still cited by SMEs are being the main barrier to their development, while 80% of them appeal for greater flexibility at work. R&D: one out of five SMEs state that they are beneficiaries of regional or national financial aid rather than European aid. Most of them spend a quarter of their activities in R&D, more than the US (14.1%) and Japan (7%), although spending in R&D only accounts for 1.23% of GDP in Europe as opposed to 2.36% in Japan and 1.78% in the US. The patent system is more expensive in Europe than in the US or Japan and also penalises SMEs. A European patent that is renewed for 20 years in three countries costs about €43,000 as opposed to €15,500 or €17,300 for a US or Japanese patent. As for globalisation, half of all the SMEs remain centred on the national market while the other half believes it important to do business in the rest of the European Union. A third of the SMEs say it is important to extend business beyond European borders. Although 69% of them are already operating or will be operating on the European market, 44% think that Europe should provide more instruments or policies to promote their internationalisation beyond European borders. Around 40% consider that they have limited access to information that could enable them to take their businesses abroad and most cite tax reasons and regulatory restrictions as the main obstacles to doing business in Europe. Tariff and non-tariff barriers are the main obstacles mentioned by half of the SMEs keen to promote their internationalisation. Finally, a fifth of the SMEs have foreign manufacturing sites or intend to have them. Lower production costs are only one reason for this diversification, proximity to a customer base and the presence of high growth markets are other reasons. A more favourable tax environment and lower administrative costs, are also judged important. In the context of stricter environmental regulatory provisions, one out of two SMEs believes that compliance with stricter standards is an incentive to attaining greater energy efficiency and improving their image. One out of two enterprises also considers these new obligations as an incentive for product innovation. A third of enterprises believe that they will be affected negatively by these stricter rules and think that they will make them less competitive than their non-European competitors. Two thirds of them would like help in attaining environmental targets, such as a reduction in administrative red tape, financial support and free expertise. More than half of them would like more self-regulation. (I.L)