SMEs not exploiting web potential

Small businesses in the UK are failing to fully exploit the global opportunities offered by the internet.

David Wei, CEO of Alibaba.com, the global online marketplace for SMEs, said UK small businesses are hampered by opting for the perceived safety of existing relationships and channels.

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Wei told silicon.com said: "I think UK SMEs are used to a very stable export or procurement approach. And that stable relationship actually stops the entrepreneurship of these small businesses thinking about expanding their business scope."

He said although internet penetration in UK is actually relatively high, it is more for personal than business use and smaller companies in particular are failing to exploit its potential.

But he warned that with the current concern about the economic climate, companies need to address this issue sooner rather than later.

He said: "Our advice to SMEs would be to reduce their concentration risk on both the buying and the selling side. To diversify their business is the best way to fight against global recession.

"Historically the buying and selling relationships for UK SMEs may be too stable - that's why they don't have the hunger to look for new channels."

Wei said the UK has several strong competitive advantages over other countries -such as engineering and the service sector - which could be exploited through the internet.

He said: "I think the global economy situation will give pressure to SMEs. Their stable relationships may be forced to change."

Alibaba.com was founded in 1999 with Yahoo! having a 39 per cent stake. At the end of 2007 it had 4.4 million SME users with around 200,000 of these in the UK.