Exporting the key to Asian SME growth
If you’re an Asian SME and a retailer and you are not pursuing an export strategy – you’re missing out, according to a study completed by FedEx.
Small- to medium-size enterprises throughout Asia Pacific that export to overseas markets are twice as likely to be experiencing growth of 11 per cent or more than SMEs who are focused solely on their home market.
That’s the conclusion of a new global research study commissioned by FedEx Express, the world’s largest express transportation company. In the survey that includes six key markets in the region –China, Hong Kong, Japan, Singapore, South Korea and Taiwan – 22 per cent of exporting SMEs reported that they were growing rapidly, compared to just 11 per cent of SMEs that sell only in their home market.
The independent study, entitled Global opportunities: Examining Import and Export Trends Among Small Businesses, reveals the considerable revenue opportunities on offer to SMEs that export. In Apac, SMEs reported that exports generate an average of US$1.8 million in revenue each year – the highest of the four global regions in the study. In certain Apac markets, this figure was far higher: Taiwanese SMEs generate an average of US$2.8 million in revenue per year from exports, the highest level of export-driven revenue in the study, while Hong Kong SMEs came in second place, generating an average of almost US$2.6 million.
“Small businesses are a critically important part of the Asia Pacific economy, and this study shows how they are able to thrive when they grasp the opportunity to sell to markets beyond their own borders,” said Karen Reddington, president, FedEx Express Asia Pacific.
“However, while many Asia Pacific SMEs see the potential of exporting, they are not confident in their ability to translate that potential into business success as they feel they lack the necessary advice and support. This should serve as a wake-up call to all stakeholders. Helping SMEs to succeed in overseas markets can only be good for the entire region,” she said.
Despite this significant opportunity, many SMEs are still hesitant about targeting overseas markets. Currently, only 36 per cent of Apac SMEs are exporting, despite a much higher proportion (77 per cent) recognising that there is a whole world of customers out there.
One of the reasons for this seems to be a lack of advice and support. Only 10 per cent of Apac SMEs believe they already have sufficient support to succeed in international markets – the lowest level among the four global regions in the study.
Logistics plays a vital role in tackling this confidence gap. SMEs in Singapore and Taiwan ranked logistics providers as their top source of expertise on exporting, and SMEs in five out of six Apac markets rank logistics providers among their top sources. A reliable logistics service provider plays an important role in connecting SMEs with overseas opportunities and shaping the experience that SMEs provide to their customers.
Despite the perceived barriers, SMEs are optimistic about the prospect of exporting in the future. Some 52 per cent of Apac SMEs anticipate they will be doing so by 2020, an increase of 16 per cent on the current level. They are even more positive when it comes to international business growth: 61 per cent anticipate greater revenue from overseas business in five years’ time, compared to just 45 per cent that predict this for their domestic business.
The study was conducted by market research consultancy Harris Interactive on behalf of FedEx Express to provide insights into global import and export behavior among SMEs and the challenges they face. Completed in September, the results are based on interviews with 6891 senior executives from 13 markets across four regions, including 3315 from Apac.