Riding ASEAN’s Growth To Power Long-Term Success
Small businesses in Asia-Pacific are targeting Southeast Asia for growth by prioritizing digital and sustainability strategies.
Small and medium enterprises (SMEs) in Asia-Pacific (APAC) are focusing their growth efforts in Southeast Asia, as the region’s economic dynamism presents new avenues for expansion. But to capitalize on these opportunities, businesses will need to implement a robust digital strategy, while burnishing their sustainability credentials.
A recent Forbes Insights survey of SME business leaders in APAC found that an overwhelming 88% of respondents intend to expand their international customer base over the next three years, with 68% seeing the greatest potential for growth in Southeast Asian countries such as Thailand, Vietnam, and Indonesia.
The survey polled 250 business leaders of small and mid-sized companies in APAC, including founders and C-suite executives across a range of industries.
According to S&P Global Market Intelligence, the ASEAN region is expected to continue to be one of the fastest-growing in the global economy over the next decade, and an increasingly important growth engine for APAC.
In the near-term, ASEAN’s growth will be supported by the continued expansion of domestic demand in several large economies in the region. Foreign direct investment inflows are also expected to remain strong, as multinationals continue to diversify their manufacturing supply chains.
However, challenges remain for small businesses to truly realize cross-border opportunities. Half of the respondents in the Forbes study cited complex customs requirements and documentation as their primary hurdles, ahead of finding new customers and partners or suppliers in global markets.
With limited in-house trade compliance expertise, navigating different customs regulations across markets remains complicated, according to those surveyed.
In the face of these obstacles, SMEs can partner with experienced logistics suppliers who have the capabilities to ensure that their international shipments are delivered efficiently and intelligently. For instance, FedEx enables businesses to transmit their trade documents electronically, and is leveraging data to generate predictive algorithms, to prepare customs clearance information, ensuring that shipments can be delivered as soon as they arrive in their destination country.
Unleashing The Power Of Digital To Drive Performance
To succeed in ASEAN and beyond, most businesses in APAC are focused on improving their customer experience and building their networks of partners and suppliers. Encouragingly, over 70% of respondents are confident of achieving these goals.
To do so, many SMEs are banking on technology like analytics and AI to develop capabilities in areas such as real-time tracking and visibility solutions.
Unsurprisingly, there is much interest in AI in the region. Over 75% of respondents expect at least some of their operations to be managed by AI over the next three years.
In particular, many companies are exploring the use of generative AI (Gen AI) in various functions, transforming them into more efficient and effective processes. Tech consultants Forrester predicts that 30% of APAC businesses will benefit from Gen AI’s transformative impact. Among other use cases, SMEs are using Gen AI to power tools that can rapidly analyze feedback to improve customer experiences, automatically generate reports to boost employee productivity, and generate content to enhance marketing efforts.
Businesses will also need to boost their cross-border e-commerce capabilities to stay competitive. That said, 54% of respondents say less than 5% of their organization’s annual IT budget supports such capabilities.
Small businesses with limited budgets can overcome these constraints through collaboration with logistics experts who integrate with e-commerce ecosystems for ordering, invoicing, and delivery. For example, FedEx is providing services within e-commerce marketplaces. Among other benefits, these services enable small businesses to access shipping options and generate shipping labels without leaving the platform. To further enhance convenience, FedEx has integrated instant messaging services like WhatsApp with its interactive e-commerce delivery solution FDMi which provides customizable delivery options and alerts to shoppers.
Prioritize Green Practices To Penetrate New Markets
Sustainability is another area where Asia’s business leaders will need to focus their resources to meet their expansion goals. While 84% of businesses say they have already integrated sustainability into their business strategy or are doing so now, only 29% say they are reducing the environmental impact of their operations, and only 17% are using sustainable practices when sourcing.
Integrating sustainability is increasingly important for business expansion, even for smaller businesses. Policymakers and regulators increasingly require corporations to embed Environmental, Social and Governance (ESG) considerations within their own operations and value chains, and to disclose them. While SMEs may be exempt from such requirements at this time, they may be required by their large customers to satisfy certain sustainability standards. Furthermore, with more consumers globally demanding sustainably produced products, it makes sense for small businesses to incorporate ESG into their operations even if they are not required to do so by regulators.
Indeed, some 66% of companies surveyed are focusing their ESG efforts on producing or delivering products and services that have positive social impact, as well as promoting social awareness and addressing issues facing society at large.
To help them in this effort, FedEx offers a Sustainability Insights dashboard that companies can use to better understand their emissions for reporting and planning. This cloud-based data tool utilizes near-real-time data from FedEx’s network to estimate CO2e emissions from shipping activities.
By employing digital tools such as AI and analytics, along with prioritizing sustainable practices, more SMEs in APAC are seeking to enhance their operational efficiencies and align with the global green transition to drive their long-term growth.
This article was originally published on Forbes.com on May 30,2024.
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