Making the most of Asia intra-regional trade

Karen Reddington

Karen Reddington

Global economic volatility might be worrying some companies in Asia Pacific, but the small- and medium-size enterprise (SME) sector is bucking the trend with strength and optimism for the year ahead.

Even if trade deals take a new path, the many opportunities that Asia intra-regional trade brings to small business leaders are here to stay.

In fact, SMEs in this region are bullish about the future. To start with, exports are looking good.  

Among Asia Pacific SMEs, global export revenue for 2016 held steady with the year before, and most SMEs believe that will continue or increase over 2017.

Trade within Asia Pacific is sparking the most confidence. Intra-regional exports are the driving force of this stronger trend – a recent study found almost nine in 10 Asian SMEs sell goods to markets in Asia Pacific and are set to do so even more. Stronger regional ties and trade linkages are also contributing to the sense of optimism and resilience surrounding small businesses.

In fact, FedEx-commissioned research found four in 10 Asia Pacific SMEs forecast an average double-digit growth of 20 per cent in intra-regional export revenue in the year ahead.

In addition, Asia Pacific SMEs also generate the highest level of revenue from intra-regional exports among the four global regions in the study.

The figures are supported by the latest Asian Development Bank (ADB) findings which show that intra-Asia trade now accounts for 57 per cent of total trade in the region.

That’s impressive against a backdrop of wide ranging business challenges from higher production costs to increasing competition, along with slower trade growth worldwide.

It is also welcome news that the crucial financing of SMEs is getting better all the time, with SME finance markets forecasting healthy growth in 2017, especially in Asia.

Another aspect of SME optimism lies in the fact that small businesses today are now more technology-savvy, well-connected, agile and able to hold their own on the world stage.

Whether it’s eCommerce, mCommerce, social commerce, the cloud, search engine optimisation, content management systems (CMS), ePayment technology or sophisticated logistics solutions, SMEs can quickly connect with more intra-Asia as well as global markets than ever before.

So it’s no surprise that eCommerce is generating significant growth – a trend that is particularly pronounced in Asia Pacific, where 80 per cent of SMEs are generating revenue from eCommerce.

In line with the boom in eCommerce, momentum is building behind two important trends – mCommerce purchases made using mobile devices, and social commerce purchases made via social media platforms.

Just under 70 per cent of small businesses in the region are currently selling their products via mobile platforms and a similar number offer customers the option of buying via social media platforms such as Facebook.

These new technologies are essential to attracting and retaining customers.

So too is the necessity to have an efficient supply chain – in order to enhance customer experience, win new customers and improve bottom lines.

As eCommerce drives demand for faster delivery, around two thirds of firms operating in eCommerce are prepared to pay more to get products more speedily to market.

Maintaining high levels of customer satisfaction in a difficult business environment is tough, especially since over a third of Asia Pacific 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 intra-regional trade.

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