Small Businesses Need Export Opportunities

America is home to nearly 30 million small businesses, which make up the backbone of our diverse, multi-layered economy. Much attention has been focused on tech startups, but in the Age of the Internet nearly every business is dependent on technology, from auto mechanics to craft brewers to hairdressers, nail salons, and boatbuilders. The Federal Reserve raised interest rates this month for the first time in seven years, a sign of sustained economic growth and increasing confidence among both businesses and consumers. Yet as economic stability returns to the United States (at least for the moment) the greater global economy grows more volatile every day.

Small businesses are not immune to the fluctuations of international trading partners. Companies with fewer than 500 employees make up 98 percent of all exporting firms, and are increasingly interconnected with businesses and consumers in other countries as globalization becomes a fact of life. Some internationally-engaged small businesses sell directly to foreign customers. Others participate in the supply chains of major multinational corporations, which allows them to diversify without taking on the risk of participating in uncertain foreign markets.

This is no small thing. The risk of doing business on the ground in foreign countries can be high, and American companies large and small have become targets of opportunity abroad. Unfortunately, this has become a rising trend. The developing world, once viewed as full of unlimited potential for business growth, has become too risky for many companies. In Brazil, once the darling of the developing countries, business confidence hit a record low in October this year. Russia's aggressive military actions coupled with protectionist trade measures has made it increasingly unattractive for exporters and investors. Still, China's disappointments might top the list.

Once the home of 10+ percent economic growth every year, economic growth in China has fallen to less than 7 percent in 2015. Rampant theft of intellectual property and an anti-corruption drive that has focused on political convenience instead of addressing the issue of corruption at its roots have both dampened the optimism of doing business in China for small, medium-sized and large U.S. enterprises.

In 2004, I led a business delegation to China as a representative of the Presidents Export Council. It was a well-attended trade mission, with both small and large businesses participating, and our many sessions were productive. Our meetings with senior Chinese government officials allowed us to relay some of the challenges U.S. businesses were having on the ground in China, and we were reassured that our issues would be taken seriously. The Chinese officials we met with expressed a particular interest in improving the environment for American small businesses. Yet more than a decade later, many of those same challenges remain, and new barriers spring up every day.

Much of the fall in optimism is due to the anti-competitive actions of Chinese regulators against Western firms. Earlier this year, Qualcomm was forced to pay a nearly $1 billion fine for supposed antitrust violations. China's new cybersecurity law has been widely criticized as a means to access encrypted business secrets of foreign technology firms. Other companies, including Apple, KFC, Daimler and Chrysler have been targeted by smear campaign in the state-owned media. OSI Group, a US-based processed meat supplier for McDonalds, Starbucks and others became a target last year when a falsified exposé by the local state-owned TV station accused the company of putting tainted meat in its food supply. More than a year later, its employees are still in jail and its operations in Shanghai remain closed.

For small businesses to compete abroad, they rely heavily on the favorable business conditions already won by larger firms who have the time, money and resources to mitigate the risk of putting down stakes in international markets. Despite making up 98 percent of exporting firms in the U.S., small businesses only account for one third of all export value added for American goods and services sold overseas. Increasing this share will help these companies, the engine of the American economy, to grow and thrive, but if foreign markets are too risky for the big corporations, small businesses don't stand a chance. Our leaders in Washington must fight for an end to the egregious anti-competitive actions against our home-grown companies abroad. Until the playing field is leveled, companies large and small will be stuck in a race to the bottom.