Making the Most of Intra-regional Trade: What Opportunities Exist for APAC’s SMEs in 2017

Over the last decade, APAC has been described as a hot spot for growth through trading and e-commerce. How can SMEs in the region sustain this momentum of growth?
Learn how to make the most of intraregional trade

By Karen Reddington, President, FedEx Express, Asia Pacific

Global economic volatility might be worrying some companies in Asia Pacific, but the small- and medium-size enterprise (SME) sector is bucking the trend with strength and optimism for the year ahead.

Even if trade deals take a new path, the many opportunities that intra-Asia trade brings to small business leaders are here to stay.

In fact, SMEs in this region are bullish about the future[1]. To start with, exports are looking good.

Among Asia Pacific SMEs, global export revenue for 2016 held steady with the year before, and most SMEs believe that will continue or increase over 2017[2].

Trade within Asia Pacific is sparking the most confidence.

Intra-regional exports are the driving force of this stronger trend – a recent study found almost nine in 10 Asian SMEs sell goods to markets in Asia Pacific[3] and are set to do so even more. Stronger regional ties and trade linkages[4] are also contributing to the sense of optimism and resilience surrounding small businesses.

In fact, FedEx-commissioned research found four in 10 Asia Pacific SMEs forecast an average double-digit growth of 20 percent in intra-regional export revenue in the year ahead[5].

In addition, Asia Pacific SMEs also generate the highest level of revenue from intra-regional exports among the four global regions[6] in the study[7].

The figures are supported by the latest Asian Development Bank (ADB) findings which show that intra-Asia trade now accounts for 57 percent of total trade in the region[8].

That’s impressive against a backdrop of wide ranging business challenges from higher production costs to increasing competition[9], along with slower trade growth worldwide[10].

It is also welcome news that the crucial financing of SMEs is getting better all the time, with SME finance markets forecasting healthy growth in 2017[11], especially in Asia.

Another aspect of SME optimism lies in the fact that small businesses today are now more technology-savvy, well-connected, agile and able to hold their own on the world stage.

Whether it’s e-commerce, m-commerce, social commerce, the cloud, search engine optimization, content management systems (CMS), e-payment technology or sophisticated logistics solutions, SMEs can quickly connect with more intra-Asia as well as global markets than ever before.

So it’s no surprise that e-commerce is generating significant growth – a trend that is particularly pronounced in mainland China, where 97 percent of SMEs are generating revenue from e-commerce.

In line with the boom in e-commerce, momentum is building behind two important trends – m-commerce purchases made using mobile devices, and social commerce purchases made via social media platforms.

Just under 70 percent of small businesses in the region are currently selling their products via mobile platforms and a similar number offer customers the option of buying via social media platforms such as Facebook[12].

These new technologies are essential to attracting and retaining customers.

So too is the necessity to have an efficient supply chain – in order to enhance customer experience, win new customers and improve bottom lines.

As e-commerce drives demand for faster delivery, around two thirds of firms operating in e-commerce are prepared to pay more to get products more speedily to market[13].

Maintaining high levels of customer satisfaction in a difficult business environment is tough, especially since over a third of Asia Pacific SMEs cite increasing competition with foreign rivals as a major challenge.

That’s why investment in new technologies and an efficient supply chain is essential for small businesses in navigating and exploiting the ever-changing digital economy, and tapping into all the opportunities ahead in intra-regional trade.

For more global findings and tips from the Harris SME Export Research, click here to watch the video.

 

[1]SMEs Waken to Cyber Risks and Reputational Damage but Optimistic on Growth”, Zurich, September 27, 2016
[2] “Global Trade in the Digital Economy: Opportunities for Small Businesses”, a commissioned research study conducted by Harris Interactive on behalf of FedEx, September 2016
[3] “Global Trade in the Digital Economy: Opportunities for Small Businesses”, a commissioned research study conducted by Harris Interactive on behalf of FedEx, September 2016
[4]Asian Economic Integration Report 2016”, Asian Development Bank (ADB), December 2016
[5] “Global Trade in the Digital Economy: Opportunities for Small Businesses”, a commissioned research study conducted by Harris Interactive on behalf of FedEx, September 2016
[6] Asia Pacific; Europe; Latin America & the Caribbean; Middle East, India & South Africa
[7] “Global Trade in the Digital Economy: Opportunities for Small Businesses”, a commissioned research study conducted by Harris Interactive on behalf of FedEx, September 2016
[8]Asian Economic Integration Report 2016”, Asian Development Bank (ADB), December 2016
[9] “Global Trade in the Digital Economy: Opportunities for Small Businesses”, a commissioned research study conducted by Harris Interactive on behalf of FedEx, September 2016
[10]Asian Economic Integration Report 2016”, Asian Development Bank (ADB), December 2016
[11]Micro and SME Finance Market Outlook 2017”, responsAbility Investments AG, November 22, 2016
[12] “Global Trade in the Digital Economy: Opportunities for Small Businesses”, a commissioned research study conducted by Harris Interactive on behalf of FedEx, September 2016
[13] “Global Trade in the Digital Economy: Opportunities for Small Businesses”, a commissioned research study conducted by Harris Interactive on behalf of FedEx, September 2016

   SME