Only a fifth of Hungarian micro, small and medium-sized enterprises carry out export activities, and the proportion of new players entering the foreign market is also low, primarily because they believe that their products, services are not exportable or because they consider themselves too small – said Budapest Bank (BB) research.
19 percent of the surveyed companies have gone to foreign markets, and two thirds of them have been exported for more than a decade, on average, for 14 years. Only 4 per cent of the respondents said that they would export to the next three years, while 77 per cent of them would be blocked.
Most of the exporting companies export machinery, tools and parts abroad, and construction and agricultural products are also characterized by foreign trade articles. The majority of exporters sell their products in neighboring countries, beyond the borders of the European Union, only 10 percent of companies venture. The most popular target markets are Austria, Romania, Slovakia and Germany.
Of the companies with revenues above 700 million HUF, the proportion of suppliers to export markets is considerably higher than the average (42 percent), while 17 percent of the 200 million forints companies carry out export activities and another 2 percent plan to move to the foreign market.
Exporters are most likely to enter the foreign market (62 percent) with the intention of increasing profits, and there are many who have begun to export (39 percent) to encourage their prospective foreign merchant partners. Agricultural companies also mentioned the scarcity of the domestic market as an important reason (48 percent).
On average, 26 percent of exporters’ revenue comes from foreign sales, with a higher turnover of more than 700 million forints, this figure reaches 44 percent. Looking back over the past five years, a third of exporting companies reported that export volumes increased, and in the next three years, 37 percent plan to expand their foreign operations.
77 percent of companies are satisfied with the opportunities offered by the domestic market. The primary reason for this is that most of them (57 percent) find that their product or service is not suitable for export. While almost no problem for agricultural companies (5 percent), 70 percent of companies in the service sector think that they would not be competitive abroad. The second most commonly mentioned reason (27 percent) is that they think the company is too small, which is primarily a problem for agricultural enterprises and merchant companies (39 and 43 percent).
Although two thirds of business executives still lacking in export markets said that they would not even want to expand abroad if they were able to overcome the current inhibitory factors, it is possible that the intense competition will put the Hungarian companies at bay: the emergence of foreign competition, according to 56 percent of the respondents, it represents on the Hungarian market, and 80% of those already exporting consider this.
The research was carried out by Gfk on behalf of Budapest Bank in May-June 2017, among Hungarian-owned companies with a turnover of HUF 10 billion or more. In the computer-assisted telephone questionnaire, 500 companies participated.