While cost controls remain crucial to survival, SME exporters may benefit from both new sources of consumer demand within Asia, and from the rising volume of trade within the region - especially if more advantage is taken of its many Free Trade Agreements (FTAs).
"Small and medium sized enterprises, which comprise 95% of businesses in the Asia Pacific region and employ nearly 80% of the workforce, play a critical role in the region's economy and will be vital in its recovery and growth in 2010," said David Cunningham Jr, president, Asia Pacific, FedEx Express.
One of the report's key findings examines how SMEs stand to benefit from two new interlocking dynamics within the economies of the Asia Pacific region:
- The first is a need to rebalance economies in the region to reduce their reliance on consumers in developed Western markets and turn their attention towards domestic demand.
- The second is intra-regional trade, by which SMEs in smaller markets in Asia may take advantage of increasing consumer demand in the region's developing giant economies, namely China.
Compared with the slow economic recovery in the West, China's retail sales grew by 15.1% during the first three quarters of 2009, almost as fast as before the financial crisis hit. The buoyant Chinese economy has the potential to anchor a new region wide trade dynamic, with China not just an assembly point for exports to Western markets, but as a final destination for goods from other Asian countries.
Linked to this trend of increasing intra-regional trade is the proliferation of Free Trade Agreements (FTA) that have been signed in recent years in an effort by Asian economies to promote more trade with each other. As of mid-2009, these economies concluded 54 FTA's among themselves and with countries outside the region.
Most recently, an FTA between China and the Association of South-East Asian Nations (ASEAN) became effective on January 1, 2010, in terms of which 90% of goods traded between China and ASEAN's six richest member states now enjoy zero tariffs.
However, FedEx's research indicates that many SMEs, with their limited resources to handle multiple tariff schedules and document requirements, do not yet know how to make use of FTA provisions.
Cunningham points out that FedEx supports any act or process that facilitates trade. "Confusing customs regulations, duties and taxes remain one of the biggest barriers for SMEs in accessing international markets, which is why FedEx offers dedicated software solutions that help small business expand their reach quickly and simply."
For instance, FedEx Global Trade Manager simplifies international shipping by identifying the documents needed for shipping to more than 200 countries. The free, online resource even calculates various taxes and duties needed in the process.
