Engineer works on a laptop next to a production line

Mid-sized firms create opportunities for suppliers and boost their local economies

You may not be familiar with their brands, but mid-market enterprises are in many ways the backbone of national industries and the global economy.

These mid-sized companies – employing between 200 and 2,000 people – make a significant contribution to growth and support millions of jobs worldwide. A new HSBC study examining the role of mid-market enterprises in 14 countries and territories (including the US, China, the UK, the United Arab Emirates and Indonesia) sheds light on their importance.

The report, which includes a survey of 1,400 key players in the sector, reveals that middle-market businesses from these economies boosted global GDP by USD9 trillion in one year, equivalent to the combined economic output of Germany and Japan. They employed 208 million people directly, the same size as the population of Brazil.

These firms could achieve even greater growth if they took advantage of international trade

Their true impact goes deeper still, as mid-market businesses create opportunities for their suppliers and their employees spend their wages in local businesses. And their impact is growing. The most recent data tells us that their direct contribution to global GDP increased at a faster rate than that of their economies as a whole.

Yet these firms could achieve even greater growth if they took advantage of international trade. Currently, just 15 per cent of their revenues come from exports and their expansion plans are more likely to focus on their home market than abroad.

This could be a missed opportunity. Further economic analysis predicts that if mid-market enterprises boosted their export-based revenues by just 1 per cent, they would increase their economic impact by USD12.5 billion across the 14 economies.

There are barriers to overcome if they are to achieve this. The mid-market sector has sometimes been described as the ‘middle child’: too small to wield the political clout of a multinational, and too big to benefit from the incentives and support given to smaller companies and start-ups. As a result, the distinct challenges that they face may sometimes be overlooked.

The research suggests that few mid-market firms consider themselves adept at adopting new technology, for example. Some struggle to attract talented people to work for them, with 50 per cent of those surveyed citing skills shortages as one of the major threats to their business. The lack of skilled recruits is particularly keen in industries such as business services, financial services and information technology, all of which rely on highly trained professionals.

As for branching out abroad, the major priority for most mid-sized businesses considering this step is simply to improve their market intelligence – understanding their potential customers, competitors and partners. Advice from public bodies, trade associations and banks can help them scope out the market and take their first steps.

What’s more, technology may present new opportunities. The internet now makes it possible for many to reach markets overseas without needing to establish a physical presence, so in some ways international expansion has never been easier, even for smaller firms.

Mid-market businesses already make a major contribution but they have the potential to be even greater in the future. It is vital that they receive the right support to help them unlock it.

Further information

You can read the full report on the HSBC Commercial Banking website.

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