SMEs in Eastern Europe are ambitious for growth. However, most of them are sub-suppliers to Western companies. So there is huge dependency in this relationship.
Traditionally Eastern Europe has put a lot of emphasis on titles and theoretical education, which is not necessarily the best foundation for entrepreneurship, although it should advance high tech innovation. This is a region, which traditionally values philosophers, writers and composers.
Eastern Europe has the potential to grow in the next decade to a major technological and manufacturing base with substantial investments and not only in the form of money, from Western SMEs and corporations.
Eastern European countries are trying hard to develop their economies.
Hungary has put special lending programs in place for SMEs. Serbia gives international companies major tax advantages. Estonia has a fixed tax rate for everything. This list goes on.
Nevertheless, behind every successful nation is a strong SME segment with innovation and export capabilities.
Here is a short collection of lessons learned with Eastern European SMEs:
- Most of them can offer lower hourly costs than in Asia
- Most of them have highly educated and capable employees
- The SME entrepreneurs, generally, lack experience in export and international sales
- Management and leadership culture is not up to the challenge for an international business
Western SMEs can contribute to the success of Eastern European partners by integrating them early on more into their continuous improvement and management processes.
Co-operating closely from the beginning increases the success rate of “eastern supplier – western customer” relationship and increases the likelihood of both companies becoming successful.
Also in their quest for export and growth Eastern European SME owner must put emphasis on real life and result oriented continuous improvement processes.
Usually Eastern SMEs like to talk about how many improvements programs in their companies are running. However, when you look closely, not much is happening apart from talk.
Eastern Europe SMEs should adopt a lot more action-oriented and proactive culture, which will bring them closer to the expectations and performance levels of their Western business partners.
Eventually this will lead Eastern Europe to more independent and strongly exporting SMEs.