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When small businesses meet big opportunities

Raj Subramaniam, Executive Vice President, Global Marketing and Communications, FedEx Services | Jan. 14, 2016
In Asia Pacific, SMEs account for 98% of all businesses, employ 50% of the workforce and contribute 42% to GDP, so it is important that they continue to succeed and grow.

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

For many visitors to Thailand, a trip to Bangkok's famed Chatuchak Weekend Market is one of the highlights of their holiday. A hub for traditional retailers, the bustling, 27-acre site houses 15,000 stalls that sell an incredible variety of art, antiques, silk, and handicrafts from around the country. Today, the flea market features prominently in tourist guidebooks and makes a respectable contribution to the local economy.

It can, however, be easy to overlook the importance of small businesses like the Chatuchak stallholders, not just to their surrounding communities but also to the wider national economy.

In Asia Pacific, for example, small- to medium-size enterprises (SMEs) account for 98% of all businesses, employ 50% of the workforce and contribute 42% to GDP, so it is important that they continue to succeed and grow.

Serving the community by looking beyond it

Today's modern technology means that the growth potential of SMEs is not limited by the size of the communities around them. New suppliers and customers can be found much further afield, and even internationally, literally with the click of a mouse.

In a recent independent research study commissioned by FedEx, we were struck by the large proportion of SMEs worldwide that are missing out on the opportunity to leverage international trade. Globally, only 38% of SMEs currently export overseas, even to markets right next door. So while SMEs may be driving economic growth, they're doing it mainly from within their own borders. Could it be that exporting overseas is simply not worthwhile? Or is there actually a significant reservoir of untapped growth potential for SMEs?

A world of possibilities

It appears to be the latter. Globally, SMEs that sell overseas generate average revenues of US$1.5 million from those exports each year. In some places, this is much higher. SMEs in Asia Pacific report that exports contribute an average of almost US$1.8 million to revenue annually.

There's also a clear correlation between exporting and achieving rapid growth. In every market surveyed, SMEs that export are more likely to be experiencing annual growth of 11% or more than ones that don't. In China, France, Germany, Italy, Japan, South Korea, Spain and Taiwan, exporting SMEs are roughly twice as likely to report such rapid growth compared to their non-exporting counterparts, while exporting SMEs in Brazil, Colombia and India are between 1.1 to 1.3 times more likely to achieve rapid growth. Taken together, the study's findings suggest a highly compelling business case for SMEs to export goods to other markets, beyond intrinsic benefits such as economies of scale, lower unit costs, reducing risks and balancing growth.

 

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