SMES: Battling for market access

The recent controversy surrounding the supply of biscuits by a small enterprise to the Mauritius Duty Free paradise has triggered a debate on the ease of market access by SMEs. Barriers to market access are regarded as major obstacles to the success of enterprises.

A newly incorporated small company has been able to supply its products to the Mauritius Duty Free Paradise (MDFP). While the MDFP finds nothing unusual about this, small entrepreneurs on their side claim it is not so easy to access such markets to sell their goods. Since the news broke out, many entrepreneurs who dream of seeing their products on display at the Duty Free shop have been requesting for information about the procedures. An inside source stated that, contrary to popular belief, there is nothing complicated and any potential supplier only needs to get in touch with the relevant department for the product category. The supplier may be asked to make a presentation on his enterprise and his products and if the product is sellable at the Duty Free Shop, it may be retained. 

It must be noted that there is no requirement for track record or years of experience in the field. Technically, one may incorporate a company now and trade within weeks or months if the product meets the approval of the shop. Similarly, there is no need to present previous financial statements. For many small entrepreneurs, the chance to display their products at the MDFP is a stepping stone to the export market, as this venue enhances the visibility of and awareness about the product to an international customer base. This also gives manufacturers an incentive to further improve their products. 

Access to exports

Even if SMEs in Mauritius already export their products, many face difficulties in finding markets. With intense competition on the local market, and market saturation, exporting represents a major lifeline for SMEs. However, according to Afribrains, a consultancy firm that works with entrepreneurs, export markets cannot be captured solely with incentives such as ‘Freight Rebate Scheme’ or refund of participation costs in international fairs. It is also necessary for would-be exporters to improve the quality of their products and to abide by norms of the respective industry, whether in presentation, composition or labeling. In order to achieve all these, entrepreneurs must necessarily invest in the appropriate equipment, as well as hiring competent staff. In some cases, entrepreneurs must be able to transform products in order to differentiate from competitors, whether through design, look or content. 

EM country reports

Enterprise Mauritius has produced a number of reports on potential countries representing a good market for our products. On its website, www.sourcemauritius.com, entrepreneurs can find extensive market reports on countries like Ghana, Bahrain, South Africa, Burundi, Tanzania, Austria, among others. 

Gavin Ng: “Value addition has a price”

What explains a price differentiation between two similar products? We put this question to Analyst Gavin Ng. He explains that sometimes the price of the same product varies from one place to another because of many factors. “The market type may be different. For example, we have often paid a bottle of soft drink or water at a higher price in a restaurant than at a corner shop. The price of a product is also influenced by transport and storage cost, which explains regional differences. An entrepreneur may also innovate a product through value addition and then put a higher price tag. Value addition can take the form of special packaging, modified contents, after-sales service, additional benefits, etc. Value addition is the enhancement a company gives its product or service before offering it to customers. It applies to instances where a firm takes a product that may be considered a homogeneous product, with few differences from that of a competitor, and provides potential customers with a feature or add-on that gives it a greater sense of value. Thus, it can justify its higher price. In general, it is advisable that entrepreneurs have recourse to economists to determine their strategies.”

Amar Deerpalsing: “Market access has always been a struggle”

The president of the Association of Small and Medium Enterprises, Amar Deerpalsing, explains that access to markets has always been a major hurdle for entrepreneurs. “Market access is not always easy. Whether it is the Duty Free shops or supermarkets, there is a lengthy procedure to follow and it takes time before one’s product may be retained. Normally, entrepreneurs must struggle a lot before being able to supply their products in such venues, unless of course one has the right contacts,” he says. “Take the example of local handicraft. It was only after years of negotiations with AHRIM that local handicraft products could find their way into hotels.” To our question whether a high price is a scam, the president of the Association of SMEs said that there are two types of products: those whose price or margin is fixed by the government and referred to as controlled goods, and those whose price are liberally determined by the seller. The price must be affixed and it is up to consumers to choose whether they want to buy a product or not. Thus, we cannot call a high price a rip-off as no one forces anyone to buy. The consumer has a choice. A higher price charged by a seller for the same product may not be illegal though it may not be morally invested.”