Multilingual Skills provide Export Benefits and Better Access to New Emerging Markets

By Ingela Bel Habib,17-11-2011
Abstract : The author analyses in a study the effects of linguistic skills on the export performance of German, French and Swedish SMEs. Contrary to popular belief, English does not suffice in economic relations as many tenders are lost through lack of skills in local languages. Small and medium sized enterprises (SMEs) increasingly use the specific language of the country to which they export so as to gain ground in emerging markets.
The study shows that multilingualism and economic competitiveness are closely linked. Swedish, French and German SMEs all use multilingualism as a strategy for exportations to varying degrees. However, only 27% of Swedish SMEs present a multilingual export strategy, compared to 68% of Danish SMEs, 63% of German SMEs and 40% of French SMEs. It would appear that this has an effect on export performance. The percentage of companies that declare they have missed out on exportation contracts due to language barriers were much higher in Sweden (20%) than in Denmark (4%), Germany (8%) and France (13%).
Résumé : Dans cette étude l’auteur montre que, contrairement aux idées courantes, l’anglais ne suffit pas comme langue des échanges économiques car de nombreux marchés sont perdus faute de compétences dans les langues locales. Les petites et moyennes entreprises (PME) utilisent de plus en plus la langue spécifique du marché d’exportation afin de s’établir dans les marchés émergents. Se basant sur les petites et moyennes entreprises suédoises, allemandes et françaises, l’auteur montre qu’il existe un lien étroit entre multilinguisme et compétitivité économique. Les PME suédoises, françaises et allemandes pratiquent le multilinguisme comme stratégie d’exportation. Cependant, seulement 27% des PME suédoises ont une stratégie d’exportation multilingue, comparé à 68% parmi les PME danoises, 63% parmi les PME allemandes et 40% parmi les PME françaises. Cela paraît avoir un effet sur la performance à l’exportation. Le pourcentage d’entreprises qui disent avoir raté des contrats d’exportation en raison de barrières linguistiques est beaucoup plus élevé en Suède, 20%, contre 4% pour le Danemark, 8% pour l’Allemagne et 13% pour la France.

If I’m selling to you, I speak your language. If I’m buying, dann müssen Sie Deutsch sprechen (Willy Brandt)

Summary

Based on the language of economic analysis I have in this study conducted a comparative analysis of Swedish, Danish, German and French small-and medium-sized enterprises. The study is based on statistical data from several national and international sources and shows that Swedish small-and medium-sized enterprises are using far fewer languages than those in other European countries. Swedish SME companies use mainly the English language and to some extent, German and French and therefore tend to export to neighboring markets, particularly Scandinavia. On the other hand small-and medium-sized companies in Denmark, England, Ireland, Germany, Poland, France and Portugal use up to between 8 and 12 market languages, which gives them better access to emerging markets.
In addition, the percentage of companies having a multilingual export strategy are at 27% in Sweden compared to 68% among Danish SMEs, 63% in Germany and 40% in France. This means that the percentage of firms missing export contracts due to language barriers are much higher in Sweden and are 20%, compared to 4% for Denmark, 8% for Germany and 13% for France.
The study shows that multilingualism is more complicated than the current belief that English is the only market language. Small-and medium-sized enterprises are using to an ever increasing extent the specific language of the export market to establish themselves in new emerging markets. The market languages that are analyzed in my study in the context of SME's export success are English, Russian, German, French, Spanish, Italian, Polish and Chinese.
Sweden, Germany and France have a similar industrial structure and compete for the same markets. I have therefore chosen to essentially compare these three countries regarding the relationship between multilingualism and export success.
The study shows that Swedish SMEs only use three market languages, mainly English. German SMEs make use of most market languages, up to 12, while the French SMEs use about 8 market languages. Here we can speak of a Swedish competence paradox. Although Sweden has a higher proportion of multi-lingual inhabitants than Germany and France, Swedish SMEs use a smaller number of market languages, which limits the export geography to Europe, mainly Scandinavia. Fewer market languages thus makes Swedish exports more vulnerable and inhibits the export performance. In this study I have shown that the use of the specific language of the export market in small-and medium-sized enterprises, among other things, provides :

1. A larger number of export countries and a higher export turnover share – Greater investment in multilingual staff brings about 10.7 export countries for the German SMEs, and 7.8 export countries for the French SMEs on average. Lower investment in multilingual staff only gives the Swedish SMEs 3.9 export countries on average. Among the German small-and medium-sized enterprises 56% have an export turnover share that is between 10 and 39% versus 41% in France. The proportion of companies where the share of export turnover is more than 40% is 40% for German SMEs and 27% for French SMEs. Among the exporting small Swedish companies the export share of total turnover is relatively low. Only 2% have an export turnover share above 80%. 18% of the companies present an export turnover share between 1 and 20% and 9% above 20%.
   

2. A larger proportion of exporting companies and a better export geography – The higher the multilingual skills among SME companies, the greater proportion of firms exporting to emerging markets and the better the export geography. Among German SMEs 43% are exporting to Central Asia, compared with 10% of French SMEs, and 8% of Swedish SMEs. This seems to be correlated with business language skills in Chinese. Among German SMEs 30% are exporting to South America, compared with 13% of French and 8% of Swedish SMEs. This seems to be related to business language skills in Spanish and Portuguese. 41% of German SMEs export to East Asia and Oceania, compared with 28% of French and 14% for Swedish SMEs.
   
3. A larger market share in the BRIC countries – Higher multilingual skills also seem to give a larger market share in the BRIC countries : Brazil, Russia, India and China. Germany's market share is 5.6 in China, 5.9 in India, 10.4 in Brazil and 16.8 in Russia. The corresponding figures for France are 2.1 for China, 3.1 for India, 4.8 for Brazil and 3.5 for Russia. This compared with Sweden's figures that are at 0.7 for India, 1.2 for Brazil and 1.8 for Russia. Sweden's market share in China has not developed enough so that it can be included in international trade statistics.
   
4. A larger number of foreign customers and a larger proportion of foreign establishments – Among German SME companies, which have higher language skills than French SMEs, the percentage of companies billing more than 50 customers abroad are at 63%. The corresponding figure for France is 15%. Multilingual skills are also important for foreign establishment. Among German companies 49% have some form of foreign establishment, compared with 24% in France and 7% in Sweden.
   

Exports are affected by many variables other than language. The relationship between export success and use of market languages remains even when taking into account other influential factors such as foreign exchange differences, macro-economic conditions, corporate structure and company size, geographical location and size of the domestic market, outsourcing strategies and R & D intensity of small-and medium-sized enterprises.
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