When Businesses are Born Global

SMEs are no longer limited only to local opportunities. Read Karen Reddington, FedEx Express Asia Pacific President, share about the trend of APAC SMEs going global by exporting to more markets beyond Asia Pacific:

Traditionally, small businesses began in one’s backyard – selling to friends and neighbors. As these small businesses grew and ventured abroad, they would have sought out markets close by or those which were culturally similar before going beyond.

But the Internet and e-commerce has made the world smaller and far-away markets more accessible. It’s not surprising that a new generation of small- and medium-sized enterprises (SMEs) are leapfrogging the domestic-first mentality and targeting international consumers from the very start.

These are the SMEs that are born global.

Typically helmed by younger founders who are well-travelled, Internet-savvy and comfortable with social media, these SMEs have identified a customer need and focus on getting their product to the consumers wherever they are.

These shifting trade trends are reflected in FedEx Express Asia Pacific SME research report[1]. For the first time, the proportion of SMEs that export beyond Asia Pacific exceeds those who export to markets within the region.

Overall, the number of SMEs exporting beyond Asia Pacific is up 254% over four years. These inter-regional transactions now account for more than half (53%) of export revenues, compared to 42% in 2016. Global exports have become more valuable too: the average annual revenue generated by exports beyond the region is US$641,000, 13 percent higher than the comparable average value of exports within the region.

Looking for opportunities

To the APAC SMEs, the world is their oyster. Instead of putting all their eggs in one basket, they are choosing to diversify their export markets instead.

With Central and South Asia opening up and consumers purchasing more, this region has emerged as the single most important destination outside the core Asia Pacific region for APAC SMEs. Almost two in five (37%) APAC SMEs are exporting there. Europe is a close second (33%) while the North America is the third most important market, at 24%.

The United States may be the world’s most important economy but it’s also a highly competitive market that attracts the big players. The SMEs, however, are good at spotting underserved niche areas where big players have yet to enter, making Central and South Asia a natural draw for them.

In the same way that the Internet and e-commerce have made it easier for SMEs to export across borders, the same factors have also made it less cumbersome for them to import from further afield.

At the same time, import patterns are reflecting a similar shift toward globalization. Almost half (46%) of APAC SMEs are sourcing beyond domestic markets. Of these, 68% import from within APAC, while 62% import from other regions, up from just 26% three years ago.

This trend is set to grow as SMEs believe that importing from other markets helps reduce their production costs and increase end-product quality. As technology continues to empower a borderless world, APAC SMEs are increasingly going to find it easier go global.

[1] “Global is the New Local: The Changing International Trade Patterns of Small Businesses in Asia Pacific”, a commissioned research study conducted by Harris Interactive on behalf of FedEx Express, July 2018.

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