The role of small and medium enterprises (SMEs) in today’s business landscape cannot be ignored. In Asia Pacific, SMEs not only account for the majority of employment and job creation, they make significant contributions to the Gross Domestic Product (GDP) in many APAC markets.
A recent research commissioned by FedEx, showed that in Vietnam, eight out of ten of SMEs who engage in imports and exports are exporting to markets outside of the Asia Pacific region, higher than the APAC average of 71%. Around 57% of those are optimistic and believe they will see a further increase in exports beyond Asia Pacific in the year ahead. At the same time, SMEs in Vietnam are even more bullish about exports within the region, with almost two-thirds anticipating increased revenue growth. Clearly, there is significant opportunity for trade within Asia Pacific markets.
SMEs are increasingly looking for opportunities to grow their cross-border commerce. Many SMEs in Vietnam understand the importance of moving up the global value chain. They, recognize that it is a driver for job creation and growth that opens up possibilities previously only available to global players.
Some Vietnam SMEs have made great strides in participating in the global value chain. Thousands of products ranging from robotics to sophisticated medical devices, many of which came from SMEs, have helped Vietnam steadily move up the trade partner list of many markets, including the U.S. E-commerce is also opening doors for SMEs in Vietnam, where ecommerce revenue is expected to grow about 15% to reach more than US$4 billion in 2022.
These shifts and developments present exciting advantages as well as daunting challenges for SMEs. They will need to develop focused strategic plans and take advantage of the support that is in place to reap benefits from the current market opportunities. Providing SMEs with the right support will help them ignite business growth.
The right regulatory environment is one of the key components to support SMEs’ engaging in global trade. Trade facilitation reforms are important to streamline trade and reduce administrative time and costs, especially for small and medium sized exporters who are the ones most affected by varying customs procedures around the world.
It is important to invest in education to help SMEs understand the rules of trade as well as the processes and challenges of venturing into new markets. Networking and having access to information from industry bodies and SME associations can help SMEs learn about current market issues and conditions.
In addition, SMEs need to take advantage of technology, which is a great enabler of success and growth. Using technology to transform payment systems and simplify processes for e-tailers can help create effortless transactions and enhance end-consumers’ shopping experiences.
At FedEx, we have been consistent in our drive towards developing solutions that will empower SMEs to take the regional and global leap. For example, we have a range of digital tools that is simple and convenient for SMEs to manage their shipping needs and we offer resources that help SMEs understand the trends and customs requirements for different markets. FedEx also has a website for small businesses and the FedEx Business Insights Hub, which offers valuable information on doing international business, e-commerce, and shipping.
Connectivity and access to a global network plays an important role in SMEs doing cross-border trade. In July 2018, FedEx launched a new route between Hanoi and Guangzhou, home of the FedEx Asia Pacific Regional Hub, which benefits all Vietnam businesses with shorter transit times for deliveries within and outside Asia Pacific.
With the right support and access to regional and global markets, SMEs can harness the possibilities around the world and elevate their competitiveness. SMEs have the potential to build Vietnam into one of the most dynamic Asian economies.