Small businesses cannot grow competitively within the EU

 The European Union is the N˚1 commercial power in the world. It represents 18% of the total volume of world imports and exports.

The USA account for 16% and Japan for 10%.

The globalization of commerce is putting great pressure on small European businesses due to mounting pressure from multinational companies that can afford to deal within the highly regulated EU market.

European small businesses must be given the right to grow freely within the EU without being limited by rules that force them to bear uncompetitive costs.

We, the small companies, all dream of setting up a central warehouse somewhere in Europe, and shipping the goods directly to our dealers throughout the 25 EU nations. This may seem easy to our Eurocrats in Brussels, but the reality on the terrain is totally different.

1/ Most dealers do not wish to be bothered by additional paperwork and therefore only wish to purchase from companies that can emit a standard VAT invoice from a company based in the dealers own country.

2/ Some countries have simplified VAT systems in place for small businesses and shops. These are therefore not interested in adding more bureaucracy to their struggling activity.

3/ Companies have to make a declaration of intra-community supplies and buyers have to make a declaration of intra-community acquisitions.

Therefore, in order to function properly within the EU, a company needs to setup subsidiary companies in every different EU nation in order to be able to compete, as regards to supplies, with existing national companies.

The costs of these setups are prohibitive for small companies and we do not therefore have a free access to the largest market in the world, one with a population of 460 million consumers.

It is however a recognized fact that it is the strength of the domestic market that makes companies strong enough to face the overseas markets and become multinationals.

The present EU regulations maintain the EU market in an atomized state, preventing our own European businesses from growing within what is supposed to be “our own market”.

This is grossly unfair compared to the US market where one company can get free access to 260 Millions consumers or 130 Million in the case of Japan or 1300 Million in the case of China.

Another advantage for the US, Japan and China is the official language; each of these markets require only one type of packaging as they each have only one official language.

Compared with our own EU with 21 official languages for 25 nations, the market advantage is immeasurable.

If you sell a product in France that is not labelled in French, you risk a fine. The same applies to all other official languages throughout the EU.

A European business that wishes to sell throughout the EU needs to acquire the services of 20 translators and I would like to know how to print 21 different explanations on a bag of fishing hooks!

Fantastic extra costs are therefore compulsory on packaging and stocks, not to mention the extra costs incurred in marketing, advertising and catalogues.

I dream of a true single market, with ONE common system of VAT instead of the 25 systems presently in place and ONE official commercial language instead of 21.

This would allow the European companies to grow competitively within the EU in order to be able to face up to the entry of larger USA, Japanese or Chinese companies that have the financial strength to deal with these trade barriers and crush us all in the long run.

It is certainly time for those in power to improve their understanding of small and medium size European businesses.

Present-day politicians have absolutely no idea whatsoever of the day-to-day functioning of a small company.

The 23 million small European businesses in the EU are a source of employment, of business competence, of innovation and of social and economic cohesion.

They employ 75 million people and represent 99% of the total number of EU companies.

They are an essential component of Industry in Europe as they represent up to 80% of the employment in some industrial sectors.

Small businesses are indispensable to strong and stable growth and to the creation of numerous and better jobs.

We need to make sure that throughout their education; our politicians acquire proper knowledge of the day-to-day functioning of a small company and learn the job the hard way on the shop floor.

If this is not ensured, our politicians will continue to live in Cloud-Cuckoo-Land* where they all come out of the same mould and the same schools and have contacts only with other colleagues of similar education.

Mr Guenter Verheugen, the EU’s Industry Commissioner recently stated: ” Small and medium size businesses play a key role in the progress of growth and employment within the EU. We must help them by creating the conditions that will allow them to prosper and by promoting a culture that incites more people to start up their own company.”

I am sure that gentleman is of good faith, but the first and foremost action to be taken is to get the national politicians to agree with EU planning.

It doesn’t look good to see French President Jacques Chirac walking out of the first working session of the most recent EU summit, in protest after the head of Europe’s Employers’ Association, a Frenchman, spoke in English.

While they squabble about the language in which a meeting is to be held, or overspend their budgets on translating every EU document into 21 languages, our European small businesses are facing a revolutionary globalization process that is leaving many behind and causing irremediable damage to the European social and economic well-being.

* Cloud-Cuckoo-Land: “A utopian world that exists only in the mind of someone who is resolutely idealistic and impractical.” (Aristophanese – “The Birds”,  5^th Cent. BC – Translated from Greek) The New Penguin English Dictionnary

Louis Tchertoff 2006-10-17