By Kim Garner, Managing Director, FedEx Express Australasia
Recently, the world has witnessed unexpected political events and economic turbulence. While there remains some uncertainty in the economic environment, with some adjustments to cope with the potential trade changes and currency rate fluctuations, there are still many opportunities for SMEs to explore and grow their businesses.
According to the International Trade Center, SMEs are the key drivers of world trade and economic growth. And according to the World Bank, SMEs account for more than half of all formal jobs worldwide. If small business owners adopt the right approach, SMEs can continue to boost the global economy in 2017 and beyond.
Asia Pacific Opportunities
For SME owners wondering where to start to grow their business, consider exporting to Asia Pacific. The export market is brimming with opportunities: Asia Pacific Economic Countries (APEC) represent 76.8 percent of Australia’s top export markets, for instance. Notably, based on a five-year trend, exports to China, Singapore, Malaysia, Indonesia, Vietnam and Thailand have increased. FedEx commissioned research reflects the same trend. Intra-regional exports are the driving force for strong export growth, particularly in Asia Pacific along with the latest Asian Development Bank (ADB) findings, which show that intra-Asia trade now accounts for 57 percent of total trade in the region.
SMEs not already tapping into the Asia Pacific region should begin mapping out a market entry strategy. With ongoing free trade agreements (FTAs) with the Association of South East Asian Nations (ASEAN) and other Asia markets, barriers of entry are considerably lowered.
Other growth prospects lie in existing trade opportunities. Lowered tariffs from existing FTAs will result in a profit boost. For instance, the China-Australia Free Trade Agreement (ChAFTA) has been in force for a year and has provided businesses significant expansion opportunities. The wine industry in Australia is already a beneficiary with tariffs down to 5.6 percent from an initial 14 percent and slated to hit zero by 2019. Tariffs were immediately removed from more than 86 percent of goods and will increase to 96 percent over time. If initial tariff rates were a hurdle when considering exporting, it would be wise to check if revisions have been made for your product.
Another aspect of SME optimism lies in the fact that small businesses today are 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 markets than ever before.
According to eMarketer, worldwide retail e-commerce sales reached US $1.915 trillion 2016. And according to a McKinsey Global Institute Report, social tools will unlock US $1.3 trillion in business value. In light of these facts, digital technologies are essential to attracting and retaining customers for SMEs.
So too is the necessity to have an efficient supply chain – to enhance customer experience, win new customers and improve bottom lines. Maintaining high levels of customer satisfaction in a difficult business environment is tough, especially since over a third of 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 regional trade.
To start 2017 on a strong note, SMEs should keep in mind the following:
- Asia bound: Expand your business into Asian markets, particularly those with an FTA.
- Invest in digital commerce: Allow customers to choose from a range of options to suit their needs, including mobile and social transactions and multiple delivery choices.
- Build a network: Use local or international vendors to support your business; leverage their services, expertise and understanding on policies and regulations.
- Be present throughout the transaction: Ensure an end-to-end experience – from ordering to returns – to inspire loyalty and drive repeat business.
- Build a customer base by taking advantage of the opportunities the digital economy presents to enter markets where there are gaps in demand and supply.
- A well-oiled machine: Have a strong supply chain with the systems and processes in place to ensure all aspects of the business operate smoothly – from ordering and fulfilment, to distribution, delivery and returns.
 “Australia’s trade in goods and services”, Department of Foreign Affairs, December 2016
 “Global Trade in the Digital Economy: Opportunities for Small Businesses”, a commissioned research study conduction by Harris Interactive on behalf of FedEx, September 2016
 “Asian Economic Integration Report 2016”, Asian Development Bank (ADB), December 2016