In the ever-shifting landscape of global commerce, the resilient spirit of small and medium-sized enterprises (SMEs) across the Asia-Pacific (APAC) region has long been admired. These businesses are known to form the backbone of our economies, but their path to international expansion is often not one without obstacles. I have witnessed both the triumphs and tribulations of APAC SMEs firsthand and it is so important that these businesses are given the opportunities to achieve their global ambitions.
The pandemic highlighted the important role SMEs contribute to the global economy. Their agility, innovation, and job creation capabilities are vital. However, it also exposed their vulnerability to external shocks. Now is the time to rally behind these businesses, offering them the support they need to ensure stability and growth.
But how do we do this and where do we need to focus?
Supply chain disruptions are a universal concern, but for APAC SMEs, these disruptions loom larger than most. Asia, with its diverse geography and geopolitical complexities, can be a particularly challenging environment for businesses. Take the Philippines and Vietnam, for example. These nations, while brimming with potential, face distinct hurdles. The Philippines is less prepared (42% unprepared versus 34% in APAC) to handle global disruptions, particularly geopolitical conflicts, while supply chain issues continue to plague Vietnamese SMEs.
In the Asia Pacific (APAC), Europe, and North America regions, 35% and 27% of SMEs regard supply chain disruptions as the most prominent disruptor over the next two years. In the APAC region specifically, the most substantial impediment to entering new markets is external events and disruptions, constituting 40% of their worries. Additionally, the constrained financial and resource capacities of majority of small and medium-sized businesses pose formidable challenges when attempting to establish a presence in foreign markets.
Language and cultural differences further complicate the picture. Effective market understanding and strong relationships with local stakeholders hinge on bridging these divides. SMEs often lack the expertise needed to navigate international trade, overcome supply chain hurdles, understand foreign regulations, and bridge cultural gaps.
Despite rising volumes of cross-border financial transactions, international payments remain a significant challenge. Exchange rates, transfer fees, and slow transaction times hamper the ambitions of global SMEs. Nearly half of surveyed SMEs cite payment-related challenges as a substantial barrier to doing business globally.
More than 90% of the SMEs surveyed engage in sending and receiving payments across three or more countries. Nonetheless, nearly half of them identify payment-related obstacles such as foreign exchange rates, transfer fees, payment delays, and confirmations as substantial hindrances to conducting global business.
These challenges often create massive barriers to smooth international trade operations and global expansion.
Navigating the hurdles
The growing trend of international expansion showcases that the ambition to tap into global markets and capitalise on emerging opportunities is very much present. It is evident that businesses, regardless of their size, acknowledge that global expansion offers not only diversification but also access to larger markets, technological advancements, and an unmatched competitive edge. Therefore, it is clear that by nurturing innovation in distinctive products and demonstrating the enthusiasm to enter new markets, companies are positioning themselves to unlock a realm of opportunities, resulting in elevated revenue streams and long-term growth prospects.
Despite these obstacles, the ambition to tap into global markets and seize new opportunities is palpable. Globalisation offers diversification, access to larger markets, technological advancements, and a newfound competitive advantage. To succeed on the global stage, SMEs must adopt strategic solutions.
First and foremost, thorough market research is essential. Investing time and resources to understand the unique demands, cultural nuances, and regulatory environments of target markets is key. Tailoring products and services to align with local preferences enhances competitiveness and builds strong customer relationships. In the midst of a tumultuous global economy, the significance of research and accessible resources as guiding pillars has never been more needed.
Payoneer’s recent SMB Barometer Report illustrates that SMEs are defying conventional wisdom and disproving claims that globalisation is on the decline. Nevertheless, despite recognising the integral role of globalisation in their success, most SMEs have yet to make it their priority. This revelation suggests that SMEs may inadvertently hinder their own growth aspirations by not adequately preparing their businesses to confront challenges and capitalise on opportunities in the realm of cross-border expansion. Such findings, bolstered by concrete data points, ultimately serve as a roadmap for SMEs worldwide, encouraging them to collaborate in building a more dependable and interconnected cross-border economy.
Secondly, collaboration with local experts and consultants is equally vital. These seasoned professionals possess invaluable insights into foreign markets, helping SMEs navigate language barriers, legal complexities, bureaucratic red tape, and cost savings. Strategic partnerships with reputable local businesses can also further cement the foundation for success and help differentiate SMEs from competitors.
In today’s interconnected world, technology also plays a pivotal role in bridging geographical divides. Communication tools and project management platforms facilitate seamless coordination between teams across different regions. Embracing Industry 4.0 technologies, such as automation, IoT, and AI, enhances efficiency and productivity in countless sectors.
Digital platforms have enhanced their supply chain management, resulting in swifter and more cost-efficient transportation and logistics operations. Among various technological advancements, cloud-based systems have also facilitated real-time data sharing, empowering SMEs to maintain agility and responsiveness in rapidly changing markets.
While venturing into new markets requires capital, securing financing is achievable through various avenues. In the long run, loans, grants, and investor partnerships can help SMEs weather initial setup costs and sustain operations during the early stages of global expansion.
Exploring new horizons for SMEs
The digitisation of industries in APAC has opened up new opportunities for growth and innovation, making it an essential driver for SMEs expanding internationally. With the right tools and resources, SMEs can not only mitigate the abovementioned risks, but also successfully expand into new markets.
The world is ready and waiting to be explored and conquered by SMEs, especially in APAC. By equipping themselves with the right market research, local expertise, technological prowess, and customer-centricity, SMEs can confidently navigate the globe and unlock new frontiers of success.
It’s time to empower our SMEs and create a more reliable and interconnected cross-border economy together.