FedEx - Asia Pacific SME Export eBookimages.fedex.com/sg/global/APAC-SME-EXPORT-E-BOOK.pdfAsia Pacific SME Export eBook, November 2015 P. 3 36% In Asia Pacific, 36% of SMEs currently

November 2015

Export trends and behaviors among SMEs in Asia Pacific

Asia Pacific SME Export eBook

Asia Pacific SME Export eBook, November 2015

Introduction

SMEs are the major driving force of the Asia Pacific regional economy. Their importance to local communities and national economies cannot be underestimated. Ensuring their success will translate into business opportunities, employment, wealth creation, and economic growth. FedEx, a leading provider of international shipping solutions to SMEs, recently commissioned a research study to shed light on the unique trends and challenges that SMEs face both globally and in the Asia Pacific region. One key finding from the research was that SMEs potentially stand to benefit considerably from selling goods beyond their own borders. Increasingly, SMEs are recognizing this potential. Small businesses that already

export are experiencing increased revenues and rapid business growth. While the proportion of SMEs that export remains low for the time being, this is set to change dramatically, with more SMEs anticipating that they will be exporting and generating revenue from international business in the near future. This report provides a comprehensive view of current export trends among Asia Pacific SMEs, along with the challenges and how we can help SMEs to overcome them.

P. 2

30%

Globally, SMEs…

… account for about

90%[1] of all businesses

… contribute around

30%[2]

of exports

In Asia Pacific, SMEs…

… employ 50%[3]

of the workforce

42%

… account for 98%[3]

of all businesses

90%

… contribute 42%[4]

of regional GDP

50% 98%

Asia Pacific SME Export eBook, November 2015 P. 3

36%

In Asia Pacific, 36% of SMEs

currently export to other markets

• 36% of Asia Pacific SMEs currently export to at least one overseas market

• The vast majority of exporting SMEs ship less than 20

times per month • Industrial items are the most common export product

category • On average, 20% of Asia Pacific SMEs’ revenue is

generated from other countries

• Hong Kong (50%), China (45%) and Singapore (41%) are the top 3 markets with the highest proportion of exporting SMEs in the region

• The region’s least active markets are South Korea, where only 26% of SMEs export goods, and Japan, where only 14% of SMEs do so

• China is the top export market for SMEs in four out

of the six Asia Pacific markets surveyed (Hong Kong, Japan, South Korea and Taiwan)

• Further afield, India is the top export market for

SMEs in four out of the six Asia Pacific markets surveyed (China, Japan, Singapore and South Korea)

Export Activity Among Asia Pacific SMEs: The Inside Scoop

Source: “Global Opportunities: Examining Import and Export Trends Among Small Businesses”, a commissioned research study conducted by Harris Interactive

on behalf of FedEx, September 2015.

“Access to

overseas markets

is no longer the

preserve of large

corporations –

more and more

SMEs are selling

overseas.”

Karen Reddington

President

FedEx Express Asia Pacific


45%

50%

14%

26%

41%

37%

China

Hong Kong

Japan

S. Korea

Singapore

Taiwan

P. 4

Percentage of SMEs that export to other markets

Most common export markets in the region

Most common export markets further afield



China Japan 25%

Hong Kong 25%

Singapore 24%

S. Korea China 55%

Japan 33%

Vietnam 21%

Hong Kong China 58%

Taiwan 28%

Japan 24%

Singapore Malaysia 44%

China 34%

Indonesia 30%

Taiwan China 68%

Japan 29%

Hong Kong 23%

Japan China 56%

S. Korea 38%

Taiwan 28%

China India 24%

Germany 19%

USA 17%

S. Korea India 39%

USA 20%

Germany 12%

Hong Kong USA 27%

UK 24%

India 24%

Singapore India 39%

Germany 16%

USA 16%

Taiwan USA 31%

India 29%

Germany 19%

Japan India 29%

USA 27%

France 19%


Exports = Big Business Opportunities

• Exports are driving revenue for Asia Pacific SMEs, which generate an average of almost US$1.8 million per year in revenue from overseas markets

• In certain Asia Pacific markets, SMEs generate significantly more than this: - Taiwanese and Hong Kong SMEs generate an average of US$2.81 million and US$2.59 million in revenue per year from exports respectively, the highest levels of export-driven revenue in the study

• Exports also drive business growth. In fact, Asia Pacific SMEs that export are almost twice as likely to be experiencing rapid growth[5] than ones that don’t. 22% of SMEs that export are fast-growing compared to 11% that sell goods only in their home market

• Surprisingly, in Japan, where the smallest proportion of SMEs export goods, those that do are 2.4 times more likely

to be fast-growing • Companies that export are more likely to have a positive business outlook. 47% of SMEs that export are optimistic

about their business prospects over the next 12 months, compared to 38% of SMEs that don’t



More exporting SMEs are experiencing rapid growth than non-exporting SMEs

APAC

11%

22% 13%

24%

12%

20%

17%

12%

24%

14%

23%

8%

18%

17%

7%

China Hong Kong Japan

S. Korea Singapore Taiwan

Fast-growing exporting SMEs

Fast-growing non-exporting SMEs


Recognizing Potential – and Overcoming Barriers

Agree

strongly Somewhat

agree

Somewhat

disagree

Disagree

strongly

Don’t

know

There’s a whole

world of customers

out there

I have the ambition

to grow my business

internationally

I’m excited by the

potential of my

business to go global

“When barriers to trade are either removed or lowered,

the cost of doing global business decrease.

Virtually every international business group wants

to simplify border procedures and reduce trade barriers.”

Karen Reddington

President, FedEx Express Asia Pacific

• In principle, Asia Pacific SMEs are positive about the prospect of exporting overseas: - 77% recognize that ‘there’s a whole world of

customers out there’ - 68% say they’re ‘excited by the potential of their

business to go global’ - 65% say they ‘have the ambition to grow their

business internationally’

• Despite this, almost two-thirds (64%) of SMEs in Asia Pacific are not currently exporting and therefore missing out on the opportunities that exporting brings

• Most exporters (88%) say that barriers exist that prevent them from exporting more. Their most common concerns were: - Potential costs of exporting (34%) - Risks of not getting paid (32%) - Potential foreign exchange losses (29%)

• The majority of SMEs (58%) also say they could use more advice and support to help them export successfully



Asia Pacific SMEs’ opinion about ‘going global’

42% 35% 12% 8% 4%

33% 32% 16% 12% 5%

35% 33% 16% 12% 5%


How Logistics Can Support Small Businesses' Success

Sources of advice on exporting

• Different markets are apprehensive about exporting for different reasons. The risk of not being paid is a much bigger barrier for Hong Kong SMEs (40%) than it is for their Singaporean counterparts (23%), for example

• However, one common thread runs through all of

these concerns: with the right advice and support, they could be overcome

• In Asia Pacific, SMEs regard logistics

service providers as one of their top sources of support: - The Internet and media (27%) - Logistics service providers (23%) - Trade bodies (20%)

• International logistics providers’ experience in shipping goods across borders represents a valuable resource to support SMEs at each step of the shipping process. They can help with rapid and reliable delivery services, and also through deep experience in trade regulations, supply chain management and logistics that can cope with challenging transportation requirements and changes in regulatory, customs or business requirements



China Hong Kong Japan S. Korea Singapore Taiwan

Internet /

Media 45% 43% 12% 15% 17% 27%

Logistics

service

providers 33% 26% 9% 13% 21% 31%

Trade bodies 32% 30% 4% 15% 13% 21%

Government 28% 20% 4% 15% 17% 19%

Banks 16% 23% 6% 14% 15% 15%

Other SMEs 22% 22% 9% 13% 9% 22%


S. Korea Singapore Taiwan

P. 8

Looking Forward – Trading Towards a Bright Future

• SMEs are increasingly looking to overseas markets. 52% of SMEs in the region believe they will be exporting and generating revenue from overseas markets by 2020 – a 16% increase compared to those currently exporting

• Singaporean SMEs lead the region here, with 67% saying they will be exporting in five years’ time – an increase of 26% on the current level

• SMEs are more optimistic about generating revenue from exports than from their domestic business in the future: - 61% believe they will be generating revenue from international exports in five years’ time, compared to 45% that predict this for their domestic businesses

• The difference was most pronounced in Japan, where 60% of SMEs predict they will generate higher revenue from

their international exports, compared to just 27% that predict this for their domestic businesses • Exporting SMEs in five out of six APAC markets were significantly more optimistic about their business prospects than

those that rely on domestic business: - 47% of exporters felt optimism about their business prospects in the next 12 months, compared to 38% of non- exporters

Percentage of SMEs that believe they will be

generating higher revenue in five years' time…



China Hong Kong Japan

APAC

… from domestic businesses

… from international exports

45%

61%

45%

61%

45% 54%

27%

60%

43%

66% 63% 71%

35%

52%


The independent study, entitled Global opportunities: Examining import and export trends among small businesses, was commissioned by FedEx Express (FedEx), a subsidiary of FedEx Corp. (NYSE: FDX) and the world’s largest express transportation company. It was conducted by market research consultancy Harris Interactive to provide insights into global import and export behavior among SMEs and the challenges they face. Completed in September 2015, 6,891 senior executives from 13 markets[6] across four regions[7] were interviewed, including 3,315 from the Asia Pacific region.

Methodology

Sample size in the Asia Pacific region

China

n = 613

Hong Kong

n = 498

Singapore

n = 586

Taiwan

n = 611

Japan

n = 501

S. Korea

n = 506


[1] “IFC and Small and Medium Enterprises”, International Finance Corporation, World Bank, March 2012 [2] “Tapping into SME International Potential”, ACCA, July 2013 [3] “The Role of SMEs in Asia’s Economic Growth”, SME Finance Forum, April 2014 [4] Asia SME Finance Monitor 2014, Asian Development Bank, 2015. Note that this figure refers to the ADB’s 20

Asia SME Finance Monitor countries, covering Central Asia, East Asia, South Asia, Southeast Asia, and the Pacific.

[5] Growth of 11% a year or more [6] Brazil; China; Colombia; France; Germany; Hong Kong; India; Italy; Japan; Singapore; South Korea; Spain; Taiwan [7] Asia Pacific; Europe; Latin America & Caribbean; Middle East, India and South Africa [8] Subject to relevant terms and conditions

About FedEx Express FedEx Express is the world’s largest express transportation company, providing fast and reliable delivery to more than 220 countries and territories. FedEx Express uses a global air-and-ground network to speed delivery of time-sensitive shipments, by a definite time and date with a money-back guarantee[8]. About FedEx Corp. FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $48 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 325,000 team members to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.

Reference

Documents

FedEx - Asia Pacific SME Export eBookimages.fedex.com/sg/global/APAC-SME-EXPORT-E-BOOK.pdfAsia Pacific SME Export eBook, November 2015 P. 3 36% In Asia Pacific, 36% of SMEs currently