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Why the G20 and B20 Are Important for Small and Medium-sized Enterprises

Picture of Volker Treier, Chief Executive Director and Head of Foreign Trade at the DIHK

More than 99 percent of German companies are small and medium-sized enterprises (SMEs). These firms are battling everyday with increasing international trade barriers; but they have only limited capacity to overcome such obstacles. G20 Germany should take the needs of SME more strongly into account. Volker Treier of the Association of German Chambers of Commerce and Industry (DIHK) believes that the B20 Presidency offers an outstanding opportunity to work towards fair competition worldwide for SMEs.

Why is the G20 – the group of 20 leading industrialized and emerging countries – and its business dialogue, B20, important for SMEs? The vast majority of companies around the globe are small and medium-sized businesses – the kiosk on the street corner, the consultancy firm and the specialist engineering company. Many are active internationally and integrated into supply chains. They buy or sell across borders. And even if such companies have a regional focus, they are nonetheless subject to the influence of internationalization – for example, through competition and imports as well as in online trade. At the same time, SMEs stand for the concept of the “honourable merchant” – especially in Germany. These businesses are active in their local region operating freely under the motto “All business is local”.

The B20 offers an opportunity that goes far beyond the everyday work of a business association

B20 is the official business dialogue of the G20 and represents the business community of the G20 member states. That task goes well beyond the everyday work of a business association of a single country. B20 is a joint project of the business community of the host country. It is, in any case, an outstanding opportunity that comes around only once every 20 years. We need to urge the G20 to create equal competition for companies, especially SMEs, and to address their concerns at the global level.

Take the importance and problems of small businesses seriously

Among those concerns are the complex legal framework conditions. It is, above all, small companies that have to battle with increasing international trade barriers (known as non-tariff barriers or NTBs) every day. As a rule, this group of companies has only limited capacity to overcome such barriers. According to the World Trade Organization, around 20 new obstructions to trade appear each month in the G20 countries alone. The experience of the Chambers of Commerce and Industry (CCI) is that new local certification requirements represent one of the biggest hurdles in international trade. We have a huge opportunity to make the G20 states aware of the impact of these NTBs, in particular for SMEs, and to demand better regulation.

At the same time, the B20 can highlight the considerable significance of SMEs for economic development in the respective countries. Ultimately, it is the regulatory environment, along with local conditions, that are of crucial relevance. On the other hand, these companies play a huge role in value creation, innovative capacity, and the provision of jobs in the local economy. And it should not be forgotten that “even the big multinationals were once small”.

Call for action by G20 countries

The G20 brings together the 20 leading industrialized and emerging countries to find joint answers to the challenges of our time. Those states that are either directly or indirectly represented in the G20 account for two-thirds of the world’s population, around 90 percent of global gross domestic product and 80 percent of world trade. If we succeed in taking a targeted approach to improving the framework conditions for SMEs, those companies will have been given the biggest possible hearing at the international level.

There are, in essence, three themes that should be addressed under the German Presidency within the framework of the B20. Priority must be given to the removal of trade barriers. The harmonization and simplification of regulations would be one viable approach. Second, digitalization offers enormous potential for SMEs, among others – for example, through operational process optimization or easier cross-border trade. To this end, access to digital platforms and networks must be strongly promoted and accelerated. And third, access to financing opportunities, which remains difficult – especially in emerging markets – must be made significantly easier. We are confident that the B20 will come up with suitable proposals on how to tackle this issue.

The Association of German Chambers of Commerce and Industry (DIHK) is the umbrella organization of 79 Chambers of Commerce and Industry (CCI) in Germany. It coordinates the worldwide network of German Chambers of Commerce Abroad (AHKs), delegations and representative offices in more than 90 countries. As acting Chief Executive Director and Head of Foreign Trade at the DIHK, Volker Treier has responsibility for the following areas: foreign trade policy and law, international markets, the AHK network and European policy. article is part of the BDI Focus Global Trade & Investment, which can be accessed here.

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