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Risk management for exporting SMEs: indicators of an importer's reliability

Import-export relationships are based in trust, but linguistic barriers, cultural differences and psychic distance makes hard developing these relationships. A recent article written by Pedro María Martínez Villar, professor at the University of León, reflects about how psychic distance affects Spanish SMEs choosing the market they want to trade with.

In the article Delimitation of the experience factor in the decision to select international markets by Spanish SMEs: The influence of psychic distance, Professor Martinez Villar explains that the accumulation of knowledge and skills of organizations in the international sphere strengthens, not only the commitment with international clients and export activity, but, as well, the confidence to begin commercial relationships with countries and cultures perceived as psychically distant.

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The countries that are psychically close, in most cases, are a great market to do business with. In the Spanish SMEs case, this market represents the members of the European Union. Nevertheless, other markets such as America, Latin-America or Asia, represent great business opportunities for Spanish SMEs even though they are psychically distant. A literature review by Assabane Ibrahim and Mssassi Said ,The contribution of business intelligence to risk management in exporting SMEs, address the importance of strategic intelligence in export risk management.

When SMEs begin their international expansion, exports play a fundamental role as they involve less risks and fewer resources. However, the export activity is also subject to risks and the perception of these risks influence the starting, maintaining and increasing export commitment, and therefore, impacting its success. Spanish SMEs represent 90% of the exporting businesses, that in 2021 increased in 7% becoming a total of 59.000 regular SMEs exporters. The whole exporting activity represented 34,6% of Spanish GDP, breaking records and achieving more than 300.000 M euros in value. Due to the importance of export activity among Spanish SMEs to the GDP is fundamental to provide them with the tools and knowledge necessary to diminish export risks.

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Main risks for exporting SMEs

Having access to anticipatory information of the possible risks of doing business with a market or specific importer place exporting SMEs in a much more secure position, reducing the possibilities of failing into fraudulent clients. Risk management helps decision-making by identifying the areas with major risks and suggesting action plans to address them. The anticipatory information seeks to reduce the risks related to lack of information of exporting SMEs.

Risks related to lack of market information

Risks related to lack of customer information

Risks related to lack of competitor information