Small-to-medium enterprises (SME) in Asia are pessimistic about their growth opportunities andtrade prospects for this year, according to the newly-released UPS Asia Business Monitor 2009. But
only relatively few plan to reduce the workforce.The main issues cited by SMEs this year include overcoming the current economic downturn,managing cash flow and rising debt and coping with increasing costs, the annual survey found of1,200 top managers in 12 countries found. A majority (41%) of the SMEs polled expect their company’s prospects to worsen in 2009, 35% feel they are likely to experience a similar business performanceas in 2008, and a quarter of them anticipate better business this year.
In view of the economic downturn, SMEs are generally pessimistic about trade, the UPS surveyfurther explained. They expect trade between their countries and other regions to significantlydecrease, particularly with Europe and North America and even within Asia-Pacific. This would leaveonly limited opportunities for overseas business which can be devastating for export-oriented SMEs,UPS pointed out.
In terms of trade growth expectations, Intra-Asian trade has a steep fall from 71% in 2008 to28% this year. Other sharp declines can be seen in projections for trade with the Middle East,falling from 55% in 2008 to 27% in 2009, North America, from 43% last year to 15% this year, andEurope, down from 54% to 15% respectively.
Despite these difficulties, however, 63% of Asian SMEs intend to maintain staffing levels andresort to other means to cope with the decline. With 80% of Asia-Pacific’s workforce employedby SMEs, their efforts to retain staff will play an important role in keeping the Asian economystable, UPS said. 71% of SMEs will tighten their cash management flow with the use of strict creditcontrol and collection plans, 67% will reduce other costs such as rent and utilities, and 33% saidthey will reduce staff-associated costs, but not necessarily through downsizing.
As for growth opportunities, 29% of the SMEs polled cite higher value-added products andservices as the single biggest growth opportunity under current global economic conditions. On thecontrary, 16% feel that exploring new markets would help them achieve growth. Comparing differentindustries, 27% consider IT as the sector with the most growth opportunities while 25% see growthpotential in the Agricultural, Forestry and Fishing industries. Slightly behind are the Healthcareand Pharmaceutical industries with 23%.
From the governments, SMEs expect more help to cope with the recession as nearly 80% citelack of government support as the biggest obstacle to SME competitiveness. While 86% of therespondents say that governments should focus on helping them gain better access to capital,financing and loans, 46% believe that government intervention is needed for their country’s economyto recover.
“This year’s UPS ABM survey shows that SMEs have a tough road ahead. With SMEs making up 95%of all businesses in Asia Pacific, their desire to keep their workforce and at the same time,operate competitively is commendable. Their call for help should not go unheeded,” said DerekWoodward, President, UPS Asia Pacific region.
“We hope the UPS ABM findings help to draw attention to the critical role of the governmentthis year and that together with the business community, we can collectively respond with adequatesolutions to ease the burden of the SMEs,” he added.
