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Asia Pacific SMEs Must Look To Cross-Border Trade

 

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By Dr. Karen M. Reddington, president, FedEx Express Asia Pacific

The power of small business in today’s digital age is clear.

If it’s the right idea, you can get a start-up moving with the speed of how fast you can text – almost everyone has a basic business platform in his or her hands right now with just a smartphone and one-click access to a shipping provider.

That’s opening up opportunities for smaller entrepreneurs unheard of in the past.

E-commerce is growing faster in Asia Pacific than any other region [1] – in fact, Asia Pacific is already the world’s largest regional e-commerce market [2] – which creates amazing opportunities for so many SMEs.

Yet success is never that simple – not every small to mid-sized firm has the confidence or the know-how to make the leap onto the world stage.

At the same time, opportunities for SMEs aren’t possible without strong digital connections, and we know connectivity isn’t spread evenly across the region.

For example, New Zealand and South Korea have 94 and 92 percent Internet penetration respectively, but Thailand is struggling to get to 30 percent [3].

We also see many statistics about the huge number and growth of small business in Asia Pacific economies.

But what’s more important is to look behind the headline numbers and drill down to the core of future growth – trade in cross-border e-commerce.

We must ask: just how many SMEs are actively exporting their services and products?

Some of those figures are a little more sobering.

In key Asia Pacific markets, only 36% of SMEs currently export goods beyond their own borders – lower even than the global average (38%) [4].

Here’s another statistic to make you stop and think. In ASEAN markets, SMEs account for just 21 per cent of direct exports [5]. What’s more, the share of SME contributions to exports varies widely among economies in Asia – for instance, it lies between 14% for Malaysia and 69% for China [6], according to some reports.

This is the striking paradox at the heart of the regional economy. Most of us know that SMEs account the majority of all enterprises [7], yet few of us understand that what really matters is just how many businesses are actually participating in cross-border trade. And particularly in the revolution that e-commerce is powering right now.

To ensure we maximize the business potential of this sea-change, we must focus on those SMEs who have the ability to drive innovation, invention and the creation of new industries. On SMEs that are actively embracing and engaging in e-commerce beyond any one economy’s border. Because that is where the real opportunities are.

 

[1] eMarketer http://ecommerce-news.internetretailer.com/nav/tags/emarketer/0
[2] Ecommerce Europe, With a turnover of $567.3 billion, Asia-Pacific is the largest e-commerce region in the world, 10 February 2015.
[3] KMR Q&A, FedEx Access Special Asia Pacific Edition, 2015
[4] FedEx-commissioned research study “Global opportunities: Examining import and export trends among small businesses” completed in September 2015
[5] ADB Banking on Better / www.eastasiaforum.org / banking on better sme financing in asean
[6] Asian Productivity Organisation: Innovation & SME Financing in Selected Asian Economies 2015
[7] 97% of all enterprises according to APEC

 

Karen Reddington

Karen Reddington is President of Asia Pacific Division of FedEx Express, the world’s largest express transportation company. In this role, which Dr. Reddington took up in January 2015, she heads up Asia Pacific from its headquarters in Hong Kong. The Asia Pacific Division comprises three regions: North Pacific, based in Tokyo; China, based in Shanghai; and South Pacific, based in Singapore. Dr. Reddington is responsible for leading the FedEx business across the region, including overall planning and implementation of corporate strategies and operations across 30 countries and territories with more than 18,000 employees.

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