The Global State of Women-Owned Small Business Enterprises

Business.com / Strategy / Last Modified: February 22, 2017

As more small businesses enter the international market, women entrepreneurs are a thriving part of the ecosystem. Learn more inside.

For small businesses and startups, the benefits of entering the international market are plentiful. The local market might be saturated, making it very competitive and difficult for a brand’s voice to be heard.

The Small Business and Entrepreneurship Council reports that nearly “96 percent of consumers live outside the U.S. and two-thirds of the world’s purchasing power is in foreign countries.”

As of February 2016, the U.S. has traded $556.2 billion in goods with 15 foreign countries.

Most small businesses in the U.S. engage with businesses in emerging markets in one way or another. Those businesses have suppliers, customers, partners, consultants, or maybe even team members in other countries.

In a 2014 Wall Street Journal article, writer Rhonda Colvin notes that small businesses are 97 percent of the U.S. exporters.

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Small companies comprise the majority of U.S. exporters. Businesses with fewer than 500 employees accounted for 294,589 of 301,238 U.S. exporters in 2012, or about 97 percent, according to preliminary data released by the U.S. Census Bureau in December.

Just more than half were small manufacturers and wholesalers, and together they generated $460 billion in foreign trade, a $10 billion increase from the previous year, or about 34 percent of total U.S. exports, according to the data.

As more small businesses enter the international market, it is important that businesses owned and operated by women have at least a basic understanding of the global market place.

The Internet and other technologies have made it easy to provide goods and services to clients around the globe. This has leveled the playing field for female business owners.

But, even though technology has helped women effectively compete with their male counterparts, there are still circumstances women entrepreneurs must face, especially outside the U.S.

China

As reported by Fortune Magazine, there are no Chinese megafirms that have a woman CEO. There are 14 women CEOs at Global 500 companies in China, but 12 of those companies are in the U.S. and two of them are in India.

According to the All China Women’s Federation, women account for 55 percent of all entrepreneurs in China. In the micro business sector in China, women account for 38 percent of all activity. This activity generates 50 percent of tax revenue and provides jobs for a significant portion of China’s urban residents and migrant laborers.

Even though women who own businesses in China make a huge contribution to local economies, a migrant woman who is an entrepreneur faces challenges under China’s hukou system. The hukou system dictates that any citizen who resides outside his or her birthplace, without a local hukou, is not entitled to benefits that might include things like state-subsidized business financing and free business training.

Any U.S. woman-owned business hoping to partner with other women-owned businesses in China will need to understand the economic challenges many of these companies face.

Canada

In 2015, approximately 36 percent (1.1 million) of Canada’s self-employed entrepreneurs were women. That number is up from 773,000 in 2001.

A few of the challenges experts have mentioned are the absence of a functioning women’s entrepreneurial organization providing help with strategy and business development, a lack of supplier diversity initiatives, and a shortage of commercial lending available to under-served businesses. Addressing these issues would remove significant hurdles for women to develop small businesses.

So, what is Canada doing to help more women become business owners?

Hadaf Zubi says, in a special report to The Star, "Canada lacks a coordinated national women’s economic development strategy. As the Telfer report suggests, '(A) national strategy would support increased funding to existing women-focused small business training programs and program expansion in those regions that do not currently support such programs, including Quebec, Southern Ontario and Northern Canada.'"

Any woman entrepreneur considering a partnership with a Canadian based women-owned enterprise will need to consider these factors.

Japan

The number of woman entrepreneurs in Japan is less than half the number of male entrepreneurs. Even though Japan provides entrepreneurship education, skills building and access to business financing, the Global Entrepreneur Development Index (GEDI) ranks Japan in fifteenth place as a country with the most favorable conditions for women entrepreneurs.

Related Article: No More Playing It Safe: Why Female Entrepreneurs Need to Take More Risks

Research indicates that Japanese cultural norms create a less-than-favorable environment for women entrepreneurs, but it’s mostly the women who nurture these cultural norms.

While she herself is single, [Kyoko] Higashiyama said she has seen many of her friends quit their jobs after they got married or once they had children. Government statistics show that even today, about 60 percent of working women in Japan quit their jobs upon the birth of their first child. 

“So I thought if I am going to start a business, I’d want to proactively employ women who are raising children or caring for sick or elderly family members, and make it a company where they can continue to work without having to quit due to such commitments in their private lives", she explained.

Woman entrepreneurs who wish to partner with a business owned and operated by a woman in Japan must understand the challenges she might face when partnering with a business owned by someone whose workforce might change often.

United Kingdom

According to the U.K. government, women own only 20 percent of the 5.4 million small and mid-sized enterprises in the UK. The UK government asserts if women kept up with the pace of male entrepreneurs, there would be at least 150,000 extra start-ups each year in Japan.

A 2015 study conducted by the government noted that the Total Early stage entrepreneurial Activity (TEA) for UK women in 2014 was 35 percent. In the U.S., that number was 40 percent. TEA is the ownership or operation of a business that is less than 42 months old.

Data collected from the same study shows the gender gap for TEA in various countries.

The following chart shows the difference between male and female TEA rates in selected countries, the TEA gender gap. A positive gender gap means that the male TEA rate is higher than the female rate. A negative gender gap means that the female TEA rate is higher than the male TEA rate.

In the UK, the TEA gender gap was 6.3, above the rate in many of the UK’s competitor countries, such as the U.S. (5.3), France (2.7) and Germany (2.6).

TEA Gender gap, percentage points; selected contries 2014 chart
Image credit: Parliament.uk

Some experts argue that the UK’s TEA rate is higher than many of its competitor countries due to a lack of teachers and mentors for woman entrepreneurs.

Carrier Green, founder of the Female Entrepreneur Association, says the biggest barrier for woman entrepreneurs is confidence and mindset. "There are many women out there who have amazing ideas but don’t take it seriously. They brush it off and think, 'I couldn't do that'," says Green. For Green, women are their own worst enemy because if their mindset isn't right, "they will struggle to be successful at anything."

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Conclusion

The issues that keep women from starting and growing a business vary and those issues span the globe. Regardless of those issues, the 2015 American Express State of Women-Owned Businesses Report says “there are just over 9.4 million women‐owned businesses in the United States, generating nearly $1.5 trillion in revenues and employing over 7.9 million people.” The same report states women-owned businesses have increased by 75 percent since 1997.

Entrepreneurs traveling from the U.S. to other countries to do business in person, should check out this useful International Business Travel Checklist. Those traveling to the U.S. from the UK, or the other 37 member countries of the Visa Waiver Program, will want to make sure they fully understand the Electronic System for Travel Authorization (ESTA) rule changes recently implemented by the U.S. government. 

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