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Why The Middle Market Matters Globally

Middle market segments in many countries comprise only a small percentage of overall business units, but they generate a significant number of jobs and revenue each year.

Still, mid-market segments are often overlooked and understudied. In response, GE Capital has sponsored several global reports and events to drive awareness to this critical and underrepresented segment of the global economy.

In an article for Forbes last month, Deloitte national managing partner Tom McGee said few people fully appreciate the mid-market’s contribution to the United States because of confusion over which companies are in the segment and how many people they hire. About 197,000 businesses in the U.S. mid-market represent one-third of private sector GDP and employ 43 million people. Globally, perceptions and contributions of the middle market are similar, reports show.

In Japan, for example, the middle market accounts for a small proportion of Japan’s total enterprises – 2.1 percent – but employs more than a quarter of total employment and generates about one-third of total revenues. “Yet, like its counterpart in other countries, it receives comparatively little attention – arguably far less than it deserves given the middle market employs a quarter of the workforce, earns around a third of gross revenues and has demonstrated remarkable resilience amid the difficult economic conditions of recent years,” according to an Economist Intelligence Unit report on Japan’s middle market, which was sponsored by GE.

Australia’s middle market only comprises only 1.4 percent of businesses but contributes $425 billion per year and creates one in four full-time jobs, according to GE Capital’s report. And in the UK, the mid-market business segment also is a key engine for economic growth and employment, delivering more than a third of the economic contribution.

The findings are hard to ignore. Still, middle market companies in the nations researched by GE Capital continue to face challenges such as tough regulations and economic uncertainties.

Mid-market executives in Japan, surveyed for the report, said poor domestic conditions and finding and developing talent are major challenges to growth. Only about a third of mid-market executives think their firms can attract required talent, which the report says reflects “the dominance of big firms in Japan’s regimented graduate recruitment process.” As a result, only 41 percent of middle market survey respondents believe their firms are committed to developing young talent who will stay at the company through their careers.

Australian mid-market businesses are increasingly concerned about declining economic conditions as well as government regulations, causing more pessimistic outlooks. In response, GE Capital formed an alliance with the Australian Graduate School of Management at the University of New South Wales. The alliance provides support and advocacy for mid-market organizations through research, scholarships and events.

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