There are two established pathways to enter global markets:

1. As a supplier to large global companies; and
2. Through the use of innovation and technology to create a unique market or platform for entry into foreign markets.

Either pathway has its own special challenges for women.

Women entrepreneurs often have limited access to resources, especially to financing. This impedes their ability to scale up to meet increased demand, to properly market products or services, and to grow their businesses. In the U.S., for example, women-owned businesses are smaller across most sectors.

Women may also find it more difficult to tap into those informal networks that develop while socializing during lunch or after work. This is why we have been creating our own women-focused referral and support networks. The Organization of Women in International Trade (OWIT) and similar groups play a huge role in this regard.

When I travel overseas, I’m particularly aware of my physical vulnerability as a woman. As a result, I often sit in my hotel room when I’m not in meetings – unless I can connect with someone safely.

If I’m traveling to a country with an OWIT chapter or virtual member, I can use the network for business referrals and to make the social connections that make me feel safer getting outside of my hotel room for drinks or dinner.

Women face barriers in both emerging economies and developed economies

Women entrepreneurs in emerging economies may face legal, social, and cultural barriers with which women in more developed economies no longer have to contend. In some countries, women still do not have a legal right of ownership of the means of production.

A 2013 study by the Inter-American Development Bank’s Multilateral Investment Fund ranked the best and worst Latin American and Caribbean countries for women entrepreneurs. The rankings were based on risks to and support for women entrepreneurs in these countries. I placed these risk/support factors into three categories:

1. Societal conditions, as manifested in the overall strength of the economy and the degree of political stability, good governance, and absence of corruption.
2. Extent of support for micro and small entrepreneurs (MSMEs), which is how the majority of women entrepreneurs in the region (and most emerging countries) are classified. Is there access to credit, technology and technical support? Does the legal structure recognize and support MSMEs, for example, through minimal barriers to start a business or favourable tax policies?
3. Support for women in business, measured through such factors as the availability of business support organizations and child support/elder care services, the extent of crime and security risks, and the levels of female enrolment in vocational programs.

These barriers are not specific to doing business internationally, but compound the challenges we mentioned above.

A significant number of women in emerging countries are involved in “informal” cross-border trade. For example, the average annual value of informal cross-border trade in the 15 countries of the Southern African Development Community (SADC) is estimated at US$ 17.6 billion.  Seventy percent of SADC cross-border traders are women. “Informal” traders procure or supply goods across borders and sell them on the streets or, when provided, in markets (rather than stores). These traders receive even less recognition and support from the formal economy.

Women in India wait 37% longer on average than men to see the same customs official. In East Africa, women involved in cross-border trade are forced to pay larger bribes than their male counterparts, or to provide sexual favors to border officials who detain them or confiscate their goods.

Banks rarely cater to their needs and they have limited access to formal credit. They may operate in unsafe environments that lack such basic facilities as proper lighting, adequate bathroom facilities, or proper storage for their goods.

Given the right conditions and support, why shouldn’t some of these women traders be able to set up storefronts in the countries in which they currently operate?

Richard Sears was a railroad station agent when he began selling watches to other station agents on the side. From his profits, he began the R.W. Sears Watch Company in 1886. Today, Sears & Roebuck is a major American retail operation with divisions in Canada and Mexico. His story is a great example of how a small business can grow exponentially by entering national and international markets.

Women entrepreneurs in developed economies tend to be less internationally oriented than their counterparts in emerging, less-developed economies. These women are more prone to focus on their large domestic market. In the United States, for example, only about 7% of women entrepreneurs are involved in international trade. Meanwhile, the average receipts for U.S. women-owned exporting firms were $14.5 million, whereas the average receipts for women-owned non-exporting firms were only $117,036.

It’s also important to realize that it is no longer possible to ignore global markets. This is where a company may find not only its next customer, but its next competitor.

Progress is being made slowly but surely

Companies have begun to value women-owned businesses (WOBs) as suppliers and are seeking them out – this is the best example of progress to date. Large global companies are establishing their own supplier diversity programs with the goal of integrating WOBs. The current challenge being addressed is how to make the connection between these companies and WOBs.

To address that challenge, the emerging model works to connect women entrepreneurs directly to global companies and their supply chains.

WEConnect International, for example, recruits women-owned businesses to join as members in the countries where they operate (outside of the U.S.). They then provide training and certification to groom them as certified suppliers to the corporate members who are part of the WEConnect network.

SheTrades has also been developed by the International Trade Centre as a web-based application to make WOBs visible to global buyers and to each other. Both models are still works in progress but provide key opportunities, particularly to small companies.

The post Female entrepreneurs face their own challenges in global trade – but it’s not all bad news appeared first on Trade Ready.

While these companies are undoubtedly a part of the equation, focusing on them often comes at the expense of equally important stories: farmers able to buy new equipment after selling their crops in new markets, women in developing countries earning their independence as international entrepreneurs, and business professionals accessing the internet for the first time to turn their small business into an e-commerce exporter.

With a focus on micro, small and medium enterprises (MSME), the International Trade Center at the University of Texas, San Antonio is working to help the latter kind of international businesses succeed on a daily basis.

Advising and assistance are key to helping businesses thrive internationally

The Center is not only a very successful trade assistance group in its own right, but also a part of the wider Small Business Development Center (SBDC) network, which has over 1,200 centers spanning the U.S., Mexico, Central America and South America.

Julio Mestas, a Senior International Business Advisor, explains that he and his fellow advisors “help small and medium-size companies become globally competitive by providing free and customized one-on-one trade advising, market research, innovative training and global connections through SBDCGlobal.”

One of his key arguments is that international trade is good for everyone, but that trade policies are often formed with major corporations in mind.

The key for all trading businesses, of every size and shape, to benefit from trade policies is equipping them with the knowledge, advice and guidance to succeed.

“We are promoting free trade agreements as a way to enhance countries’ economies, but we are subject to the interest of powerful corporations. Current international trade agreements are unbalanced, since some countries have the road paved to move the merchandise forward, while others get nothing but barriers.

“Creating international trade opportunities for the micro and small businesses in the region is our response to that issue.”

Giving a helping hand to MSMEs

The organization’s focus on MSMEs is of the utmost importance to them.

To help them better, SBDC is increasing its number of counselors through the region to grow their capacity to assist more clients, and launching a free online trade platform called SBDCGlobal to link clients with new counselors.

The MSME sector of any country is the true engine of sustainable economic development since the sector provides opportunities and engages the talents of its entrepreneurs,

Julio explains.

“Our goal is to help small businesses grow their export sales, reduce risks and lower costs, and help them to uncover and capitalize on new market opportunities within their own region with the assistance of a qualified SBDC counselor.”

With such a vast network, and collaborations with the U.S. State Department, USAID and others, the push towards building MSME assistance programs from the International Trade Center and other SBDC network members “has consistently created the conditions to produce economic impact for the micro, small and medium business sector in the region.”

Combatting poverty and inequality across the Americas

SBDC’s expansion into the rest of the Americas, Julio says, has been crucial in their mission to use international trade as a tool to alleviate economic imbalances.

“If we make international trade accessible to the world’s poorest countries, we will not only promote prosperity locally, but also increase a continued growth pathway for prosperity. Assisting micro and small business to become successful is the goal of every SBDC professional, as it benefits individual entrepreneurs and their families.”

“Linking programs in the U.S. with those in Mexico, or elsewhere in Central and South America, will lead to increased small business competitiveness and connectivity in the region and will result in the creation of sustainable economic impact that includes new business starts, expansions, increased access to capital and the creation of new jobs.”

Along with the increased wealth and success for the individuals assisted, giving a hand to micro and small businesses across the region can also have wider socio-economic implications for everyone in North and South America.

Doing this in multiple countries in Central, South America and other regions for tens of thousands of clients over the span of many years is creating a tremendous public benefit as it is generating thousands of new jobs and helping to formalize thousands of new businesses that will improve the overall economy.

“This results in lower unemployment, decreased poverty, lessens the need for illegal immigration, reduces the incentive to commit crimes, increases the tax-base of the Central American governments and promotes greater regional economic integration and stability.”

Taking a stand for small businesses and developing countries in FTAs

For the most part, Julio says that business professionals across different countries and sizes of enterprise aren’t as different as some people may think.

“At the end of the day, businesspeople all have pretty similar worries and challenges: how am I going to pay my payroll this month, how can I find new clients for my product/services, how can I pay less taxes, etc.”

With that in mind, he hopes that in the future, the same opportunities can be ensured for all professionals who want to engage in international business, regardless of what country they’re from or their wealth.

“Access to international trade has a major impact on the economy of developing countries, so let’s promote a shared participation, including trade facilitation.”

If we consider it fair to grant access to government procurement for small business, why not do it at the international level?

“Negotiating trade agreements in the open, with a minimum percentage for the SMEs, could make a huge difference and will give legitimacy to agreements that otherwise are difficult to swallow.”

Do you think international trade currently decreases or increases economic inequality around the world? What can or should be done to use trade as a tool to decrease the gap between the world’s wealthiest and poorest people?

The post How helping businesses grow can decrease economic inequality worldwide appeared first on Trade Ready.