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BLOG: How SMEs are turning around city economies

Filippo Sarti | Aug. 2, 2011
SMEs are leading recovery in cities and emerging markets, because they can deliver agility and innovation.

The role of SMEs

So what types of companies around the world are participating in the much hoped-for turnaround in cities like Detroit, or the growth of emerging markets such as Latin America or Asia? Many of them are SMEs. In Singapore, Charles Cheong, the founder of Otho Technology, a banking consulting company which caters to emerging Asian economies, cited the sky-high office rental costs as a prime reason for choosing a Regus virtual office with a prime location address.  "Not only did I save on office rental but I also met several other start-up companies which became my business associates. This is something money can't buy - the networking opportunities with like-minded people in start-ups."

His views were also echoed by Henrik Petersen, director of Innodan which specialises in generating revenue growth through innovative software technologies. Originally working from a rented shophouse, Petersen moved his address to a Regus virtual office. "Having a very mobile business, where our employees either work from clients' offices or from homes, it makes economic sense to do away with the office and save on rental, reception and cleaning. We can finally focus on doing business," said Petersen.

Today's new breeds of entrepreneurial SMEs such as Otho Technology and Innodan are often strongly focused on international and emerging markets. They do not want to drain resources seeking out office premises in each place they touch down in or explore; instead, they want access to a ready-made, worldwide network of workspace such as Regus, which keeps pace with the global business shifts in their own industry.

These global business shifts and the emergence of new markets challenge the advanced, high-income metros of the US and Europe - as Detroit well knows. The Global Metro Monitor states: "If they fail to pursue new models for economic growth ... they could ultimately fall even further behind in an ever-more integrated global economy." Singapore, situated at the heart of Asia, has a buoyant economy fuelled by international trade, and is well positioned to take advantage of this trend.

The report continues: "Estimates suggest that by 2020, more than a quarter of the global middle class will live in Brazil, India, and China alone, and most within their major metropolitan areas. If advanced metro economies in the US, Europe, and elsewhere hope to help satisfy that demand, they must build from their endemic market strengths, continuously improve their rates of innovation, advance their leadership in the emerging low-carbon economy, and most of all, embrace the potential of exports ..."

It is referring to metropolitan areas, but it could equally well be describing companies. Exports, innovation, emerging sectors - the ability to compete post-recovery is all about agility, the ability to act quickly, unhindered by deadweight legacies - whether that comes in the form of a city's outdated industrial and labour base or a large corporate organisation's baggage of expensive real estate.


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