Differentiation is key in today’s globalised environment

The global economic turmoil has taken its toll on small and medium enterprises (SMEs) with more and more being bought out by bigger ventures. According to Menso Kwint, accounts executive for Lombard Trade Finance, smaller businesses are being bought as they are rolled up into bigger corporate structures. This is particularly prevalent in industries like forwarding, pharmaceutical retailers and independent food and grocery retailers, he said. Lower profit margins have become a global trend and SMMEs who do not share the volume of trade of bigger businesses have found it hard to survive and therefore become a target. “Global communication, travel, infrastructure and capital mobility have shrunk the world,” said Kwint. “Services are offered from call centres in India and goods manufactured in China are often a fraction of the cost of those made elsewhere. Global competition and ease of trade mean profit margins in most industries have been forced lower and lower.” It is therefore important that SMMEs now more than ever before differentiate themselves in terms of what they offer. “The need to define your product through a unique or specialised offering to escape the competitive price battle is very important,” said Kwint. “More and more a service experience is being used to carve a niche position in the market. “ And with South Africa expecting a rise in inflation due to the knock-on effect of wage, electricity and fuel price increases. SMMEs need to take congnisance of the world’s uncertain and changing times. With around 1.5 million SMMEs in South Africa, they contribute roughly 56% of private sector employment and 36% of gross domestic product. They play a hugely important role in our country,” said Kwint.