Forecasts of growth and business prospects reflect economic downturn
Tokyo, May 26, 2009 - UPS, the world's largest package delivery company and leading provider of supply chain solutions, today announced the results of its 2009 "UPS Asia Business Monitor (ABM)" survey, which looks at competitiveness from the perspective of small and medium sized businesses (SMEs) in Asia.
The survey, now in its fifth year, was conducted among 1,200 SME leaders in 12 countries and territories in the Asia-Pacific area, including Japan, China and India. It examines the SME's perspective and awareness on the issues of economic growth, employment, expansion of international trade, competitiveness and issues of concern and the impact of the global economic downturn.
This year's ABM reveals a significant change in business sentiment among SME leaders, reflecting the impact of the economic downturn. The results differ sharply from past trends up to 2008. Opinions as to which industrial sectors are likely to do well, views on factors contributing to SME competitiveness, forecasts of economic growth and assessments of their own business prospects all reflect the current economic climate.
Economic growth and the timing of the economic recovery is pessimistic
Optimism regarding the prospects for economic growth in Asia has fallen sharply: While the overall ratio of Asian SME leaders expecting growth was over half in 2008, it was down to 15% this year. Of the 12 countries surveyed, Singapore and Hong Kong were the most pessimistic, with only 4% and 5% of SME leaders, respectively, expecting growth. Although 19% of Japanese SME leaders expect to see growth in their markets, which is higher than the Asian average, 69% expect to experience declines.
When respondents were asked to predict the timing of economic recovery, 47% of the respondents said that they expect recovery by 2010. In comparison, Japanese SME leaders were more pessimistic with a majority of 29% predicting that economic recovery would occur after 2012.These results reveal that there is a considerable amount of anxiety among Japanese SMEs during an uncertain economic climate.
Twenty-five percent of Asian SME leaders expect an improvement in their business prospects this year, a fall from previous years when it has consistently been above 60%. In Japan, the number of SME leaders who expect improved business prospects for the year dropped from 28% to just 12% this year. On the other hand, Japanese SME leaders who expect their business prospects to be worse, increased from 15% to 65% this year.
Human resources seen as most important factor in competitiveness
The impact of the recession was also apparent in forecasts of workforce numbers for 2009. Last year, 49% of Asian SME leaders expected to increase their headcount, while only 21% said the same this year. Last year, Japanese SMEs were the most pessimistic, with only 5% saying they would increase their workforce, but this year 21% said that they would, the same as the Asia average.
When Japanese respondents were asked what measures they would take to maintain business performance in a stagnant world economy, the most common response among Japanese SME leaders was "Reduce other costs (not including personnel costs)", which was cited by 78%. Of the Japanese SME leaders, 51% said they would reduce staff cost, which is the highest in the region, where the average is just 33%. In terms of competitiveness, the most important factor for Japanese SME leaders is the "Availability of a qualified workforce", which scored highest in terms of both importance and lack of availability. These results indicate that, although personnel costs exert significant pressure on the business performance of Japanese SMEs, the availability of capable workers is still a major issue for them, as it was in 2008.
Big changes in prospects for industrial sectors
When respondents were asked which sectors of industry held the greatest growth potential for SMEs in 2009, the most common response in Japan was "Utilities & energy" (cited by 39%), followed by "Healthcare & pharmaceuticals" (36%) and "Biotechnology" (35%). Last year's top three are gone from the leader board with "IT" falling from 41% to 20%, "Automotive" from 25% to 6% and "Manufacturing" from 22% to 14%, reflecting the current economy. By contrast, "Agriculture, Forestry & Fishing", which scored only 4% in 2008 rose to 19% this year, indicating a tendency to expect growth from sectors less susceptible to an economic downturn.
When SMEs were asked what would be the single biggest growth opportunity in the current economic condition, the most commonly cited response, both in Asia (29%) as a whole and in Japan (58%), was "Moving to higher value-added products and services". Other significant growth opportunities include "Exploring new markets", "Optimizing operations and production" and "Forging new business ventures, acquisitions or partnerships".
Japanese SMEs are considered the most competitive in Asia
When respondents were asked to rate the competitiveness of SMEs in other countries, Japanese SMEs scored the highest with 69% of Asian SME leaders this year saying they thought Japanese SMEs were more competitive than SMEs in their own country. Some 54% of Japanese SME leaders voted Indian SMEs the most competitive, 46% voted for Taiwanese SMEs and 44% for Korean SMEs.
As in 2008, Japanese SME leaders felt the most important factor in the competitiveness of SMEs was the "Availability of qualified workforce", yet this is very much lacking. Other challenges Japanese SMEs have to overcome are the lack of "Access to funding and working capital" and the need for more "Government support". When respondents were asked where the government should provide support to enhance SME competitiveness, most want "Better access to capital/financing/loans for SMEs " (83%), followed by more favorable "Taxes/tariffs" (74%), indicating that SMEs experiencing a shortage of funds due to the recession are increasingly looking to their country's government for support.
Japanese SMEs show least awareness of supply chain management
Of all the factors contributing to SME competitiveness, Japanese SMEs felt that "Supply-chain efficiency" was the least important, rating it at only 59%. The average across the region was 84% and this particularly low rating in Japan indicates low awareness of supply chain management.
While Japanese perceptions of the role of supply chain management were similar to those recorded across Asia, with "A means of cutting costs" (cited by 32%) and "A method of quality assurance" (18%) occupying the top spots in Japan as they did across the region, the ratio of SME leaders who felt supply chain management was "Not a necessity to business success" was 23%, more than double the 11% ratio for Asia as a whole, indicating that Japanese SMEs do not regard supply chain management as particularly important. The president of UPS Japan, Yoshiki Mizokuchi, commented: "UPS Asia Business Monitor has been recognized since 2005 for clarifying the actual issues that affect SMEs in Asia. Our fifth survey this year reveals how the recent economic turmoil has affected SMEs. In this harsh economic climate, SMEs are under pressure to cut costs and further increase their efficiency. Supply chains are not simply a means of transporting goods, they are also an important way of rationalizing business costs and reducing risk. As an international logistics company, UPS aims to help SMEs in Japan to understand this and to rationalize their supply chains by providing a broad portfolio of transportation and logistical services."
For more information on the UPS Asia Business Monitor, please refer to http://www.ups.com/abm.
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.
About "UPS Asia Business Monitor" Survey:
- 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 2009 surveyed 1,200 decision-makers of SMEs between January 8, 2009 and February 27, 2009. 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 (100), 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.
|
|
 |
UPS Pressroom |
|
|
Read press releases, announcements and other media-related information about UPS.
|
|
 |
|
View History