Overall the survey reveals a cautious outlook for Asia's SMEs
India, June 16, 2008 - UPS today announced the findings of its fourth annual Asia Business Monitor (UPS ABM 2008) survey, a study of competitiveness of Asia's small and medium enterprises ("SMEs"). With India's growing importance in global trade and its businesses gaining a stronger foothold in the world economy, Indian SMEs are bullish on the country's economic growth and more optimistic about their own business growth than other SME leaders in Asia Pacific.
"The Indian SME's have a more positive outlook towards their growth and business prospects in contrast to most of their regional counterparts," said Derek Woodward, President, UPS Asia Pacific. "The Indian economy is growing, which is reflected by the Indian SME's confidence this year."
"This year's ABM shows an interesting shift in mindset and optimism, and points to an undercurrent of caution," added Woodward. "Fewer SMEs polled this year are projecting regional economic growth. Many are anxious about their own business outlook, competitiveness and workforce matters. By bringing these issues to light, we hope to help the SMEs overcome their business challenges and improve competitiveness."
"The SMEs contribution to the Indian economy is invaluable. It is therefore encouraging to note that Indian SME leaders are optimistic about their growth opportunities. Our objective through the ABM survey is to highlight what drives SMEs across the region and specifically in India as one of India's major economic engines for the future," said Pirojshaw Sarkari, Managing Director of UPS Jetair Express Pvt. Ltd.
Key highlights from Indian SMEs in the UPS ABM 2008 include:
Outlook towards regional economic growth
80% of Indian SME leaders are optimistic about their country's economic growth. India and China are seen as having the greatest prospects for growth. There is only a marginal decrease amongst the Indian SME's from last year when 81% of SMEs indicated good economic prospects for India.
Outlook towards business prospects in 2008
India displays the highest level of optimism across the region as 87% of the SME leaders are confident of their business prospects in 2008. It signifies the high levels of optimism across Indian SME community which is a contrast to most of their regional counterparts.
Workforce retention
While India continues to lead the other countries with 66% of SMEs planning to increase their workforce in 2008, this is a decrease from last year's 79%. Also this year, 29% of SMEs in India plan to retain their present workforce.
Sector with highest growth opportunity
44% of the Indian SME leaders felt that Information Technology will be the sector bringing in the highest growth opportunities. This is followed by automotive (36%) and building and construction (28%). Only 4% feel that the transport and logistics industry will be showing growth prospects. Interestingly, 17% (highest across the region in this category) of the Indian SME's feel that biotechnology will be a promising sector.
Reaction to the growing woes of the U.S. economy
India and China remain least affected by the looming downturn in the U.S. economy. This demonstrates that Indian SMEs are seeking and making most of the opportunities outside the United States.
The China paradox
40% of the Indian SMEs feel that China will boost their business prospects. This is a marginal decrease from last year (46%).
SME Competitiveness
41% of those outside India rated Indian SMEs to be more competitive than them. There has been a slight increase in the percentage compared to 2007, when 39% rated Indian SMEs to be more competitive.
But while Indian SMEs are most optimistic when it comes to their own business prospects, SMEs outside India have not given Indian SMEs a high rating. Yet in comparison to the other findings, India still is the only country where this figure has increased this year as compared to last year.
Obstacles to SME competitiveness in India
Indian SMEs see transportation infrastructure, government support and supply chain efficiency as highly lacking.
However, SMEs in India are rated as having the highest level of entrepreneurial spirit when compared to their counterparts in the region.
The tension areas
For Indian SMEs, the top three business issues that are keeping them awake at night are retention of quality employees (48%), customer loyalty/retention (46%) and quality of products/services (40%). 54% of Indian SMEs feel bureaucracy and red tape in processing applications is a big issue (54%) followed by lack of collateral (46%) and lack of institutions willing to lend (30%).
In contrast last year, 34% Indian SMEs stated the lack of institutions willing to lend to small businesses while 40% stated insufficient collateral.
The Supply chain puzzle
45% of Indian SMEs feel that lack of forecasting demand is a huge issue followed by fragmented supply chain sector (37%) and lack of knowledge and expertise (35%). Also a matter of concern was use of unreliable logistics and shipping service providers (34%).
Impact of increased FDI into India
More than half (55%) of India's SMEs feel that FDI has opened up new opportunities for their businesses.
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.
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), and 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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