Staff Reporter | 26 Jun, 2008
A recent report says that China has emerged as the leading destination for MSMEs (Micro Small & Medium Enterprises) to set up operations abroad, due to low production cost, ease of setting up operations and cheaper manpower.

The report based on a survey conducted by SME advisory firm Milagrow says that the European Union comes in second. The reasons cited were a standardised production processes, even though it was accepted that labour rates are higher in the European Union.

The survey, conducted across 68 MSMEs in the NCR region, sought to understand the issues that MSMEs face when setting up operations abroad, and plans of these firms to expand their business globally.

In tune with the India growth story, 78% of the MSMEs confirmed that have plans of setting up operations abroad, and of these 50% plan to set up operations globally within a couple of years. Currently most of the MSMEs (81%) do not have a global presence. The rest have offices or representation in 1-3 countries only.

The MSMEs interviewed were chosen from a cross section of industries ranging from telecom equipment, to auto and electronic components. 51% of the MSMEs chosen for this survey have less than 30 employees while 16% have 30-50 employees. Close to 50% of the targeted MSMEs are into exports.

Of these, 27% export to 2-3 countries, 21% to 3-5 countries and 15% to more than 10 countries, the survey notes.