Asia Pacific SMEs Must Look to Cross-border Trade

E-commerce is growing faster in Asia Pacific than any other region, which creates amazing opportunities for so many SMEs. But what’s more important is to look behind the headline numbers and drill down to the core of future growth, so what’s next?
SMEs and future Asia Pacific growth

Do numbers matter? Yes – if we want to challenge more small businesses to participate in cross-border e-commerce

By Karen Reddington, President, Asia Pacific, FedEx Express

The power of small business in today’s digital age is clear.

If it’s the right idea, you can get a start-up moving with the speed of how fast you can text – almost everyone has a basic business platform in his or her hands right now with just a smartphone and one-click access to a shipping provider.

That’s opening up opportunities for smaller entrepreneurs unheard of in the past.

E-commerce is growing faster in Asia Pacific than any other region – in fact, Asia Pacific is already the world’s largest regional e-commerce market– which creates amazing opportunities for so many SMEs.

Yet success is never that simple – not every small to mid-sized firm has the confidence or the know-how to make the leap onto the world stage.

At the same time, opportunities for SMEs aren’t possible without strong digital connections, and we know connectivity isn’t spread evenly across the region.

For example, New Zealand and South Korea have 94 and 92 percent Internet penetration respectively, but Thailand is not yet at 30 percent1.

We also see many statistics about the huge number and growth of small business in Asia Pacific economies.

But what’s more important is to look behind the headline numbers and drill down to the core of future growth – trade in cross-border e-commerce.

We must ask: just how many SMEs are actively exporting their services and products?

Some of those figures are a little more sobering.

In key Asia Pacific markets, only 36% of SMEs currently export goods beyond their own borders – lower even than the global average (38%)2.

Here’s another statistic to make you stop and think. In ASEAN markets, SMEs account for just 21 per cent of direct exports3. What’s more, the share of SME contributions to exports varies widely among economies in Asia – for instance, it lies between 14% for Malaysia and 69% for China4, according to some reports.

This is the striking paradox at the heart of the regional economy. Most of us know that SMEs account the majority of all enterprises5, yet few of us understand that what really matters is just how many businesses are actually participating in cross-border trade. And particularly in the revolution that e-commerce is powering right now.

To ensure we maximize the business potential of this sea-change, we must focus on those SMEs who have the ability to drive innovation, invention and the creation of new industries. On SMEs that are actively embracing and engaging in e-commerce beyond any one economy’s border. Because that is where the real opportunities are.

1KMR Q&A, FedEx Access Special Asia Pacific Edition, 2015

2 FedEx-commissioned research study “Global opportunities: Examining import and export trends among small businesses“” completed in September 2015

3 ADB Banking on Better / www.eastasiaforum.org / banking on better sme financing in asean

4 Asian Productivity Organisation: Innovation & SME Financing in Selected Asian Economies 2015

5 97% of all enterprises according to APEC

   E-Commerce, SME