Cyprus businesses pessimistic in overseas plans
Nearly two thirds of Cypriot
businesses do not want to expand overseas
and of those who do, more than half want to
embark in safe trade, avoiding adventures
into high-risk investments and challenges, a
corporate survey has found.
In a telephone poll of 2,000 business executives in companies employing at least people conducted in January and commissioned by the World Trade Centre Cyprus, CMR Cypronetwork Market Research concluded that only one in five or 21% have overseas operations or are actively involved in foreign markets.
Of those, 58% have trade cooperation with local enterprises, 27% operate trough exclusive agencies and only 15% have independent operations, including franchising and joint ventures.
Most of the Cypriot businesses have a presence in Greece (48%), followed by the U.K. (35%), Germany (17%), France (14%), Lebanon (13%) and Romania (13%).
Other business destinations include Sweden (12%), Austria, Belgium, Italy, Bulgaria and Russia (11%).
Greece is more popular among trade and services companies, while the U.K. for industrial and trade companies.
As regards exports, 29% had trades worth less than CYP 100,000 (EUR 172,000), 7% had exports of CYP 100,000-250,000 (up to EUR 430,000), 5% had CYP 250,000-500,000 (up to EUR 860,000) and 16% booked deals worth over CYP 500,000 (EUR 860,000). However, a worrying 43% did not respond to this question at all.
Only 32% of the 21% that have already established foreign business activities are interested in further overseas business, which suggests that Cypriot business people are hesitant to enter new markets or take risks overseas.
The pessimism continues as of those who do not have any overseas presence, 73% are not at all interested in doing any business abroad. Only 6% are keen to enter foreign markets, with the remaining 21% as yet unsure what they want to do.
At least the ones who are interested to go overseas are very keen to do business within the next six months (39%) or 7-12 months (22%), with a further 22% looking at a medium-to-long-term plan of one to two years. Of these most are interested in services, industry and trade. Construction is the most popular segment of those who plan to expand over the next year or two.
As regards the challenges, the biggest concern is human resources or the labour force (32%), followed by a lack of knowledge of foreign markets (24%) and insufficient capital (19%).
Looking overseas, all of the other 26 EU member states are target countries for overseas expansion with Greece leading the pack attracting 38% of those interested, followed by the U.K. (32%), Romania (28%), Bulgaria (26%) and Germany (20%), with the Baltic states and Luxembourg attracting 12-13% interest.
Among Middle East opportunities, only 10% of respondent to the CMR survey said they would be interested in Lebanon, followed by Jordan (7%), Saudi Arabia (6%) and the UAE (6%). Russia was at the bottom of the list with 5%, while responses for Africa, Asia, the Americas and Australasia did not register in the survey.
In preparation for overseas expansion, some 65% said they were ready to increase their output to meet foreign demand.
According to the survey, 67% consider quality of service to be their best traits of whom 81% are from the industrial sector. A further 34% believe that know-how is an advantage (of whom 71% are in the construction sector), while 26% claim they have a price advantage that will help them break into new markets. ‘Value for money’ only accounts for 3% of the respondents’ opinion of themselves.
Market research (41%) is by far the most sought-after service most enterprises believe they need in order to enter new markets, followed by financial support (28%) export planning (21%) and promotion (14%).