As China’s real GDP continues to expand and the domestic economy looks positive, mainly owing to the government stimulus package, so SMEs across Asia look in a position to capitalise on the faster than predicted recovery.
Small to medium enterprises are particularly important in Asia as they account for the bulk of employment in many of the region’s economies and, according to the Economist Intelligence Unit, are “the cornerstone of Asia’s entrepreneurial spirit”.
In a recent report, Towards the recovery: challenges and opportunities facing Asia’s SMEs, the Economist Intelligence Unit examines how Asian SMEs are coping with the economic crisis and how they stand to benefit from policies that are aiming to reduce their reliance on exports and look toward domestic demand and increased intra-regional trade.
The report’s key findings include:
- The times are tough, but Asia’s SMEs are tougher – and they are in the right region to take advantage of the upturn.
- Cost control and inventory management are still crucial to survival. The prompt collection of accounts receivable and a thorough quality control process are also priorities.
- SMEs could benefit from a rebalancing of Asia’s largest economies. Some export-oriented SMEs are in a good position to shift their exports towards their Asian neighbours rather than the West. China’s middle class looks like it may be able to fulfil this demand.
- Accessing domestic markets may not be easy. Stiff competition, diverse internal markets and the high costs of brand building and product differentiation may make switching markets for exports unrealistic for some SMEs.
- A new intra-regional trade dynamic could help SMEs. Free trade agreements are already happening across the region and are viewed positively by those already doing cross-border business.
- SMEs need more information about existing free trade agreements in order to take advantage of them.
Read more:
‘Towards the recovery: Challenges and opportunities facing Asia’s SMEs’, Economist Intelligence Unit, 26 January 2010
Copyright Economist Intelligence Unit
‘China’s growth prospects’, New Wave Markets by UK Trade & Investment, 4th January 2010
