One Region, Endless Opportunities

Karen Reddington, President, Asia-Pacific Division (APAC), FedEx Express, on the growth of the middle class and technological change within the region.

Karen Reddington oversees a region that includes more than 30 countries and territories and more than 18,000 FedEx employees. Reddington began her career with FedEx Express in 1997 as an operations research advisor in Hong Kong, and most recently served as the regional vice president of FedEx Express, South Pacific.

ACCESS: You work with a wide range of FedEx customers and government officials throughout APAC. When you speak to business leaders who live and work outside of the region, what are they most surprised to learn from your perspective?
KAREN REDDINGTON: One thing is that people often talk about Asia-Pacific as a single entity. But it really consists of distinct markets, many of which are in completely different stages of development. Perhaps the most interesting — and most challenging — thing about the region is its diversity of business and cultural practices.

Customs regulations, duty and tariff regulations are also changing all the time. So we encourage local innovation from team members to keep up with the pace of change. A good example recently occurred in Vietnam, which has complicated customs regulations. When a customer’s shipments got delayed there, a FedEx operations specialist took the initiative to design a new process — and then persuaded customs officials and terminal operators to implement that process. The customer’s shipment was released and delivered on
time.

Another thing to consider is the wide variations in connectivity. For example, New Zealand and South Korea have 94 percent and 92 percent internet coverage, respectively. But Thailand is struggling to get to 30 percent. There really is no one-size-fits-all solution.

ACCESS: Despite China’s slowdown, Asia remains the world’s fastest-growing economic region. What are some of the effects of that growth?
K.R.: The biggest change I’ve seen over the years is that Asia has moved from being the world’s factory to being the home of some of the biggest consumer markets. The region now has a very strong middle class. You hear a lot about that in the context of China, but it’s equally true elsewhere. Singapore, for example, is traditionally ranked as the region’s most developed market, and it is now the world’s third-richest country. Malaysia has averaged 5.7 percent GDP growth since 2010. And we are also seeing healthy growth in the Philippines and Vietnam. Current estimates point out that Asia will have around two-thirds of the global middle class population by 2020.

One result of that expanding middle class is a big growth in inter-Asian trade — it now represents about 25 percent of total Asian trade, which is at $6 trillion per year. Asia now has its own supply and demand ecosystem, with end-to-end, production-to-finished-goods manufacturing. So the landscape here is changing dramatically.

ACCESS: And e-commerce has been another growth area for the region, too.
K.R.: Yes. The developing middle class and the emergence of a massive consumer class are part of the momentum. But there are other factors, including rapid consumer adoption of mobile technology and improved access to credit. We’re seeing that Asian consumers shop and spend online more than the global average.  As a result, we’re now seeing the emergence of companies such as Taobao.com. It’s only one of Alibaba’s companies, and it uses a similar business model to eBay. But it has approximately 800 million product listings and claims about 80 percent of the Chinese C2C market.

ACCESS: What challenges does e-commerce pose — and how is FedEx responding to them?
K.R.: Last-mile delivery is one big challenge. We’ve addressed that in part by establishing key partnerships rather than by only building from scratch. For example, in Australia, we’re working with Australia Post. We have the advantage of our global network and customs clearance capabilities. We’ve married those up with Australian Post to fulfill last-mile delivery for us. But with e-commerce, it’s not just the network or delivery that needs to be tackled. It’s also what we call the “software” of regulations and procedures. A lot of countries have not established the regulatory environments to support e-commerce. It can be difficult to move personal shipments across borders into some Asia-Pacific jurisdictions. So we work quite hard with governments on reforms.

ACCESS: What are some other trade reforms that are needed?
K.R.: Nothing does more to speed up the movement of goods than regulatory reform. When barriers to trade are either removed or lowered, the cost of doing global business decreases. Virtually every international business group wants to simplify border procedures and reduce trade barriers. One simple way to do this is to raise the de minimis value at which goods are assessed duty and
taxes. According to the International Chamber of Commerce, a global baseline de minimis value of at least US$200 would generate huge economic benefits.

Source: FedEx Access –  http://access.van.fedex.com/wp-content/themes/Access-2015/flipbooks/Access10/files/inc/8212d1dea4.pdf  (pg.10)

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