The leaders of small- and mid-sized businesses in Asia are optimistic about prospects this yearbut are more worried about rising costs in their region, a new UPS survey shows.
Unlike the United States, where inflation remains largely under control, the Asian businessleaders cite rising costs as their No. 1 “most pressing business concern” by a margin of 2-to-1over other issues such as cash flow and interest rate hikes.
And unlike most large regional and multi-national companies in Asia, the small- and mid-sizedenterprises (SME) say they will continue to focus their foreign trading efforts on other countriesin Asia, not the United States or Europe. These smaller firms conduct more than 80% of theircross-border business inside Asia and over the mid-term, some 56% of the SME leaders plan to stayfocused on expansion in Asia.
The findings are contained in the latest annual edition of the UPS Asia Business Monitor, whichthis year surveyed 1,350 SME leaders across 13 markets: Australia, China, Hong Kong, India,Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam.
“This year’s Asia Business Monitor shows that many regional SME’s have broken free from thefinancial shackles of the 2009 crisis,” said Derek Woodward, president of the UPS Asia PacificRegion. “More than half (52%) expect greater growth opportunities in 2010 while only 4% anticipatea decline.”
Small businesses in the Philippines are by far the most bullish on their country’s prospects,while Korea’s SMEs foresee the fewest opportunities in 2010.
The projections of SME’s for trade growth within Asia have more than doubled since last year,from 28% to 69%, the survey found. That positive attitude seems to have been fuelled, in part, bythe number of Free Trade Agreements (FTA) that took effect or were negotiated this year, includingpacts between Southeast Asia countries and China, Australia and New Zealand and between Singaporeand Costa Rica. The Obama administration announced earlier this summer it intended to move forwardwith a US-Korea FTA.
“The confidence of the Asian SME’s in overseas trade is close to levels seen during thepre-financial crisis period,” added Dan Brutto, president of UPS International. “They’re justfocusing first on their own region, which is not surprising. That certainly is consistent with thestrong, double-digit package volume growth we saw last quarter across Asian trade lanes.”
While information technology and manufacturing continue to be the leading industry sectors interms of predicted growth opportunities, the SME leaders named the automotive sector the third ofthe Top 3 sectors for 2010, a development in line with recent industry reports. For example, theautomotive industry in India grew at a compound annual growth rate of 11.5% over the past fiveyears, while expectations of sales growth in South Korea’s auto market now total about 16% in2010.
