How Internet-Enabled SMEs Reach out to the Global Market

23 October 2013 - A Workshop on Access in Bali, Indonesia

Internet Governance Forum 2013

Workshop # 333 Report

How Internet-Enabled SMEs Reach out to the Global Market

Organizer Name 

Langenegger Matthias

Organizer Entity 

Computer & Communications Industry Association

Workshop Theme 

The Internet as an Engine for Growth and Advancement

Consise description 

 

This workshop explores the link between the Internet’s multistakeholder governance system and its ability to drive global trade and development; using the example of online marketplaces in the global South.

 

The Internet has become central to global trade, reshaping production, distribution and consumption patterns worldwide. The resulting markets are highly transparent and efficient with low barriers to entry but little attention has been given to how SMEs are utilizing online services to reach consumers in global markets despite the fact that they are one of the largest beneficiaries of the trade benefits of the Internet.  Now, as a result of the instant global access that the Internet provides, SMEs are engaging in global trade at an unprecedented rate.  This shift has profound implications for the future of trade and development.  It does not matter how remote an SME is, if it has access to the Internet it has access to the global market.


This workshop will look at how the Internet’s multistakeholder model is changing the trade landscape and empowering both consumers on the one hand, and sellers and producers on the other, with a particular focus on SMEs. With more than half a billion people connecting to the Internet the first time by 2016, almost all of them in the global South, it is time to explore the impact of the networked economy on trade and development.

 

Agenda 

- Introduction of the panelists and brief introduction to the issue - Presentation of case study: How the Internet has empowered small and smallest entrepreneurs in Indonesia - Presentation on the main findings of the eBay study on trade-enhancing effects of online marketplaces in developing countries - eBay representative - Presentation on the growing importance of the networked economy in Trade relations in recent years, with a particular focus on developing countries - Panelist discussion with extensive audience interaction on the presentations and follow-up Summary of main outcomes of the discussion and next steps

Moderator 

Nick Ashton-Hart

Remote Moderator 

Matthias Langenegger

Have you organized workshops at previous IGFs?

No

Workshop format 

Panel

Workshop Transcript 

Transcript

Brief substantive summary of the workshop and presentation of the main issues that were raised during the discussions 

 

The Internet has become central to global trade  and has reshaped production, distribution and consumption patterns worldwide. The resulting markets are highly efficient, transparent and characterized by low barriers to entry. However, until now little attention was given to the fact that small and medium enterprises (SMEs), particularly those in the global south, are among the largest beneficiaries of this development. Today, SMEs are utilizing online services to engage in global trade at an unprecedented rate. This workshop looked at how online services help small businesses, how it drives development and how it affects the global trading regime.

 

Farid Maruf, Country Director of the Grameen Foundation in Indonesia, gave an overview of their initiatives to alleviate poverty through Internet-enabled services. He noted that the ability of Indonesia’s 147 million poor people to improve their livelihoods is severely compromised by three factors: the lack of actionable information, the inability to absorb financial and other shocks, and the persistence of insufficient and inconsistent incomes. The Grameen foundation’s strategy to address these problems are threefold:

 

  • provide information services to collect and disseminate trusted, actionable information;

  • provide appropriate financial services to manage household cash flows; and,

  • personalized economic advice based on specific client data.

 

In cooperation with a network of donors and partners, such as Qualcomm and RUMA, his organisation has built a range of services that empower micro entrepreneurs across Indonesia. This includes mobile payment systems, online sales channels and an online network to share and disseminate vital market information. It also includesKerjaLokal a mobile platform that matches blue-collar job seekers with employment opportunities in their area.  

 

Usman Ahmed, Policy Counsel at eBay, followed with a presentation on the use of online marketplaces by developing country SMEs. According to a study that compares distribution patterns of small sellers on eBay with their offline peers in the developing markets, there is a remarkable correlation between the use of online services and the probability of an SME to export. “In a traditional trade model”, he noted, “a small producer in a developing country would link into a large multinational who produces locally in order to ship it to a developed market.” In the Internet age, this model has been complemented by one in which sellers connect directly to foreign customers through online platforms. While this model will not completely replace conventional distribution patterns, it is an exciting development which will empower small entrepreneurs in the developing world. However, the continued success of this model depends on a number of factors:

 

  • services like eBay depend on the underlying layers of the Internet to remain open and accessible;

  • sellers depend on balanced intellectual property rights to avoid the creation of fragmented national markets; and,

  • buyers rely on internationally harmonised consumer protection rights and customs laws.

 

The latter can be quite a problem. For example, as the moderator of the session, Nick Ashton-Hart, pointed out, even in developed countries like Switzerland, it is not always possible to reclaim import tax when a good is returned. This creates a barrier for international eCommerce as consumers take a disproportionate risk when buying abroad.

 

At the end of the session, the discussion turned to the international trade regime. As Usman pointed out, trade rules were created during a time when only large Western multinationals traded goods internationally. As a result of this, free trade agreements are often seen by critics as a means for these businesses to flood developing countries with their products at the expense of local producers. However, the trends described in this workshop will eventually create enough pressure for international trade rules to become more SME-friendly. Hopefully, this will help smooth some of the traditional fights in the international trade discussion.

 

Conclusions drawn from the workshop and further comments 

 

  • The global Internet has led to a more inclusive form of globalisation, one that empowers small and medium-sized businesses all over the world. For this trend to continue, it is vital that:

     

    • the underlying layers of the Internet to remain open and accessible for businesses;

    • intellectual property rights are balanced to avoid a fragmentation of national markets;

    • consumer protections rights and customs laws are internationally harmonised; and that,

    • national payment systems in the developing world are linked to international payment systems.

 

Reported by 

Matthias Langenegger, Computer & Communications Industry Association

Estimate the overall number of women participants present at the session 

About half of the participants were women

To what extent did the session discuss gender equality and/or women's empowerment? 


It was not seen as related to the session theme and was not raised

Discussion affecting gender equality and women's empowerment 

 

Workshops Staticals 
Number of FEMALE participantsNumber of MALE participantsNumber of Young participantsNumber of Developing Countries ParticipantsNumber of Developed Countries ParticipantsNumber of LDCs participantsNumber of TOTAL Participants
9 13 6 4 16 1 22