Bangkok, 17 June, 2009 -- Majority of Thai small-to-medium enterprise (SME) business leaders expect flat growth (47 percent) for 2009 due to the economic slowdown in Asia Pacific and the rest of the world. Only 23 percent of SMEs expect some growth (Appendix 1). These are the results from the UPS Asia Business Monitor (UPS ABM) 2009 survey.
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 the 3rd APEC Business Advisory Council Meeting in August 2008, SMEs make up 95 percent of all businesses in the Asia-Pacific region and employ 80% of the workforce. This year, the UPS ABM 2009 surveyed 1,200 SME decisions makers across 12 key Asia Pacific markets, including Thailand.
Resilience in the face of challenges
"A good percentage of Thai SMEs surveyed still anticipated some growth prospects, though the majority expects flat growth. In light of the global economic downturn and recent domestic political turbulence, this reflects optimism among local SME leaders," said Greg Carstens, Managing Director, UPS Thailand.
As a whole, Thai SMEs have a more pessimistic view of the global economic recovery than the rest of the region. Only 21 percent expect a recovery in 2009 or 2010, as compared with 46 percent from the entire Asia Pacific. Thirty-four percent of Thai SMEs expect the recovery to take place in 2011 (Appendix 2).
With 80 percent of Asia-Pacific's workforce employed by SMEs, their efforts to retain staff will play an important role in keeping the Asian economy stable. Only 11 percent plan to reduce their workforce, which is lower than most all other countries surveyed in the ABM, except for China and Korea. Nine percent expect to increase their workforce this year (Appendix 3).
To weather the effects of current global economic recession, 79 percent of Thai SMEs will tighten their cash flow with stricter credit control and collection plans, 58 percent will reduce other costs such as rent and utilities, and 55 percent said they will diversify and/or explore new revenue streams (Appendix 4).
While struggling to survive the economic downturn, the survey revealed that SMEs in Thailand and Asia also seek ways to position themselves strategically for the upturn. The most pressing concerns cited by SME leaders this year are: overcoming the current economic downturn (70 percent), coping with increasing costs (49 percent) and managing cash flow and rising debt (35 percent). SMEs report that the government role is crucial in helping them through this challenging period and in particular, enhance their ability to access funding (Appendix 5).
Supply chain key to cost cutting
Thai SMEs recognize that supply chain management is key to cost cutting (42 percent). A further 20 percent see supply chain as a method of quality assurance (Appendix 6).
"This reflects a significant improved perception of supply chain management in supporting businesses considering Thai SMEs have made a very few changes in their supply chain practices over the recent years. To operate competitively in the current economic situation where cost cutting is critical, we foresee that Thai SMEs will adopt more effective supply chain management in their businesses," said Carstens.
Other key findings in the UPS ABM 2009 include:
Thai SMEs are focused on delivering new value and targeting new markets
Twenty-seven percent of Thai SMEs polled cite moving to higher value-added products and services as the single biggest growth opportunity under current global economic conditions, while 23 percent feel that exploring new markets would help them achieve growth, and 19 percent aim to strengthen the workforce with good talent (Appendix 7).
Capitalise on China's increasing dominance in the global marketplace
The Thai sentiment towards China has improved over previous years with 39 percent recognizing that China's growing prominence a boost to Thai businesses. This compares with only 18 percent in 2008 (Appendix 8). Thai SMEs believe that the growth of China will prompt increased Chinese investment in Thailand (23 percent). They also show confidence in their products with plans to export more to China (21 percent). A further 18 percent believe that their businesses can leverage China's low-cost products for their own successes (Appendix 9).
Thai SMEs foresee potential in Agricultural, Leisure & Tourism, Manufacturing and Automotive
The greatest growth opportunities for Thai SMEs in 2009 remain in the Agriculture, Forestry and Fishing sector (61 percent), which is not surprising for the world's largest exporter of rice. Leisure & Tourism (21 percent) and Manufacturing (19 percent) are the other key growth areas (Appendix 10). Sixty-six percent of Thai SMEs still regard Agriculture, Forestry and Fishing as the sector that will provide the most growth opportunities in the next three to five years (66 percent). SMEs also see potential in the Leisure & Tourism (48 percent) and Automotive (25 percent) industries within the next five years (Appendix 11).
Thai SMEs want governments to do more to help them weather the recession
Eighty-one percent of Thai SMEs cite lack of government support as the biggest obstacle to SME competitiveness (Appendix 12). The top three ways the government can help small and medium businesses compete are research and development (94 percent), improvement of bureaucracy and regulations (94 percent) and support on access to capital, financing and loans (92 percent) (Appendix 13).
About UPS Asia Business Monitor
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. As discussed at the 3rd APEC Business Advisory Council Meeting in August 2008, SMEs make up 95 percent of all businesses in the Asia-Pacific region and employ 80% of the workforce. This year, the UPS ABM 2009 surveyed 1,200 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, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Georgia, USA, UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at www.UPS.com. To get UPS news direct, visit pressroom.ups.com/.
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