Results also indicate SMEs desire further integration of their economies with China
Beijing, May 27, 2008 --SMEs in China are regarded as the most competitive in the region for the 4th consecutive year as recognized by majority (62%) of SMEs polled, according to the UPS newly-released Asia Business Monitor 2008 (ABM), an annual survey conducted on competitiveness and issues facing SMEs in Asia.
The ABM 2008 results showed that almost two-thirds (65%) of Taiwanese SMEs believe Taiwanese companies should maximize opportunities in China; and majority of SMEs in Hong Kong (74%) feel that Hong Kong should continue to integrate economically with China. This indicates that further integration of the economies in the Greater China region (China, Hong Kong & Taiwan) is key to sustaining growth in the territories. At the same time, a sentiment of caution is penetrating across Asia that challenged most small-to-medium enterprise (SME) leaders.
"This year's ABM reveals hopes by SMEs in the Greater China region for a stronger integration and the current external conditions seem ripe to do so. At UPS, we continue to see strong performance in China with a 15% export volume growth in Q1 of this year," said Sebastian Chan, Vice President, Supply Chain Operations, UPS China.
However, the UPS ABM 2008 also shows an interesting shift in mindset and optimism, and points to an undercurrent of "caution". Fewer SMEs polled this year are projecting regional economic growth. Many are anxious about their own business outlook, competitiveness and workforce matters.
"SMEs in China play an important role and contribute much to the development of China's national economy," commented Feng Chun'an, economist and expert in Economy of National Programs for High Technology Research and Development (the National 863 Project), and professor of the School of Economics of Central University of Finance and Economics. "The lack of market access, qualified employees and innovation are top three challenges that face SMEs in China, which was clearly illustrated in the UPS ABM 2008 result. This survey result indicated the need for a more opened market access policy for further integration of the economies across the Greater China region, and the consolidation and strengthening of SME competitiveness as well as the development of China macro economy."
Mr. Li Xiaoshuang, former Olympic gold medalist and now Chairman of Beijing Lixiaoshuang Sports Goods Co. Ltd. attended the ABM launch conference in Beijing, China as a Chinese SME representative. At the conference, Mr. Li shared his perspective on the upcoming Beijing 2008 Olympic Games and the potential business opportunity that the Games might bring to his company.
Highlights for China in the UPS ABM 2008 include:
SMEs in China are top in competitiveness
SMEs in China continue to be regarded as the most competitive in the region, as recognized by majority (62%) of SMEs polled.
Key areas of "Caution" unearthed in the UPS ABM 2008 include:
Skepticism on regional economic growth
Fewer SMEs are expecting economic growth compared to last year in 11 out of the 12 markets polled, indicating a dip in optimism across the board. Japanese SME leaders show the biggest lapse in confidence, with only 36 percent anticipating growth, followed by South Korea (57 percent) and Thailand (44 percent) respectively.
Hiring freeze or headcount reduction likely among Asian SMEs
The UPS ABM 2008 shows that SMEs are hesitant about their prospects for workforce growth. More than half of the SMEs polled do not plan to hire or are considering reducing their headcount. This indicates that the SME community may be bracing themselves for a tougher business environment.
Trade with North America expected to decrease significantly
In line with the current economic climate, only 39 percent of SMEs expect trade with the U.S. to grow, compared to 51 percent in 2007, while only 25 percent (versus 32 percent in 2007) expect volume of trade with Canada to grow. Outlook on Intra-Asia trade is expected to remain robust at 71 percent, while there is a slight improvement in the outlook for trade growth with the Middle East, Europe and Latin America.
U.S. economic woes creates uncertainty in the region
The possibility of economic downturn in the U.S. is creating anxiety among SMEs in the region. SMEs in Indonesia (63 percent), Hong Kong (57 percent), South Korea (54 percent) and Singapore (53 percent) are most concerned their businesses will be hampered in the event of a U.S. economic downturn.
While the U.S. economic slowdown is affecting markets around the globe, the giant economies of China and India do not see this downturn as significantly affecting their operations.
Urgent call for Government action in sustainability
An overwhelming 81 percent of SMEs polled feel that the government should take a more active role in sustainability, while another 51 percent of SMEs feel large corporations should take on more responsibility. SMEs cite cost (67 percent) and staff motivation (49 percent) as the two major challenges to their ability to champion sustainability practices.
The workforce headache
Nearly all SMEs (90 percent) across the region recognize that having a qualified workforce enhances competitiveness. However, half say that retaining a qualified workforce is the most pressing business issue.
The China Paradox
While fewer SMEs regard China as a threat compared with 2007, the UPS ABM 2008 shows that mixed feelings still linger on. Twenty-one percent of SMEs still view China as a threat while 30 percent view it as both a threat and a boost to their business, indicating that the Asian SMEs are still unsure about the impact of China's growth to their businesses.
The supply chain puzzle
Though 80 percent of SMEs across the region believe supply chain efficiency is important to their competitiveness, the majority seem unsure as to how to achieve this. Nearly one third of SME respondents are still experimenting with ways to manage their supply chains more effectively, and over a quarter acknowledge they are under-utilizing the power and neglecting the management of their supply chains.
Getting through the business financing maze
More than half of the SMEs polled face difficulties relating to business financing. Regionally, 38 percent find bureaucracy and red tape a hurdle in processing their applications for funding, while nearly 30 percent respectively cite lack of institutions willing to lend to small business and insufficient collateral as issues.
About UPS ABM
Since its launch in 2005 the UPS ABM has been conducted annually to deliver the latest insights on the changing business needs of SMEs, the largest business community in the region. According to Asia Pacific Economic Co-operation (APEC), SMEs make up about 99 percent of enterprises in the regional APEC economy, contributing between 30 and 60 percent of an economy's gross domestic product. This year, the UPS ABM 2008 surveyed 1,201 company owners, proprietors, CEOs, Managing Directors and other top management across 12 markets.
About UPS
UPS (NYSE: UPS) is the world's largest package delivery company and a global leader in supply chain and freight services. With more than a century of experience in transportation and logistics, UPS is a leading global trade expert equipped with a broad portfolio of solutions. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. The company can be found on the Web at UPS.com. To get UPS news direct, visit pressroom.ups.com/RSS.
Notes to Editors
UPS ABM series provides the latest insights into the changing opinions, attitudes and habits of business leaders from the region's small and medium sized enterprises.
UPS ABM 2008 surveyed 1,201 decision-makers of SMEs between December 18, 2007 and January 24, 2008. Interviews were conducted by an independent research organization, TNS, in Hong Kong using the respondents' native language. SMEs are defined as companies with fewer than 250 employees.
Interviews were conducted in the following 12 markets: Australia (100), China (150), Hong Kong (100), India (100), Indonesia (50), Japan (100), South Korea (100), Malaysia (100), Philippines (101), Singapore (100), Taiwan (100), Thailand (100).
Respondents were from a range of industries: automotive, electronics & electricals, garments & textiles, gifts & housewares, healthcare & pharmaceuticals, timepieces, jewellery & optical goods, toys & sporting goods, and others.
The UPS Asia Business Monitor is available for download at www.ups.com/abm.
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