The Identification of the Perceived Difficulties in Overcoming the Barriers to Direct Export When Moving from Indirect Export: The Case of Chinese SMEs

Abstract

The indirect export route can often provide a low risk first stage in the internationalization process. Many enterprises, however, can become locked into the indirect export route and do not progress to direct export. It has been suggested that indirect exporting in China can be a double edged sword, and that it may prevent the accumulation of international experience and knowledge that organizations need to develop further. The aim of this research is to identify which of the selected barriers to export represent the greatest increase in perception of difficulty when considering the transition from indirect to direct export. This research identifies a range of 17 barriers that impact on small to medium sized enterprise (SME) export, from the export stream of literature, and then measures the perceptions of decision makers in the difficulty in overcoming these barriers when using the indirect and direct export routes. The differences in perception of the individual barriers between the export routes are a measure of the difficulty, through gaps in knowledge and resource, in moving from indirect to direct export. The research methodology adopted a quantitative approach and data was collected from 98 SME decision makers in the Chinese province of Ningxia, and was then subjected to statistical analysis. The findings include the wide differences in the perception of difficulty in accessing foreign distribution channels, the ability to obtain and understand information to operate in new markets, and finding reliable local representation when moving from indirect to direct export. In addition, two of the barriers are perceived as more difficult when using indirect export compared to direct export.