With the economy recovering from a global pandemic, more small and medium-sized enterprises (SMEs) and large enterprises in the ASEAN and Greater China regions are looking to expand internationally in a bid to grow revenue and profits.
The UOB Business Outlook Study 2023 (SME & Large Enterprises) surveyed more than 4,000 businesses in Asia. For the first time, the survey was expanded beyond Singapore to also survey companies in the Bank’s other key markets in Indonesia, Malaysia, Thailand, Vietnam, Mainland China and Hong Kong SAR.
The survey found that 83 per cent of businesses are keen to expand overseas, and this desire is most pronounced in Indonesian, Chinese, Thai and Vietnamese companies. Companies in Hong Kong, Malaysia and Singapore are the most hesitant. About 4 in 5 companies value having a cross-border digital trade platform for their overseas expansion. However, some challenges holding businesses back include:
- difficulties in finding the right partners to work with
- lack of in-house talent
- lack of legal and regulatory compliance and tax support.
Most cited needing more support to venture overseas including connecting with overseas partners or clients and tax incentives.
ASEAN and China are the top two markets which businesses want to expand to. Only 1 in 4 companies want to expand beyond Asia. Within ASEAN, Singapore is seen as the most important country for businesses to venture into, followed by Thailand and Malaysia.
Supply chain concerns
Around 60 per cent of SMEs surveyed highlighted that their supply chains have been affected by the ongoing geopolitical tensions.
Companies are feeling the heat from the impact of global inflation on their cost of supplies and the challenges in procuring suppliers. About 3 in 10 are now trying to diversify their supply chain, investing in building stronger relationships with their suppliers, and also tapping on data analytics to help decision making.
SMEs also said they would like more support for tax incentives, training programmes to reskill and upskill employees, easier access to funding/grants and connections to the right technology and solution providers to help ease their supply chain woes.
Implementation of sustainability practices not widespread among businesses
The study also found that around 90 per cent of businesses believe that sustainability is important, however, only 45 per cent have implemented sustainability practices. More than 50 per cent of SMEs in Thailand and Vietnam have adopted sustainability practices, while only 38 per cent of SMEs in Singapore have these practices in place.
When implementing sustainability practices, businesses cited that they are most concerned about the increase in costs to customers, and the impact it will have on their profits and revenue. Businesses in ASEAN said they want more tax incentives and sustainable financing options, while businesses in Greater China want connections to industry peers and access to business analytics and insights.
Mr Lian added, “Regulators, industry leaders and corporates are becoming more rigorous and disciplined in achieving sustainability standards within their supply chains. Businesses that are slow to embrace ESG may lose out on business opportunities. The study found that less than half of businesses have incorporated sustainability practices.”