Ninety-eight percent of small and medium-sized businesses doing cross-border trade in Indonesia are focusing on global growth and expect export revenues to grow over the next few years, according to research by online freight service Shipa Freight.
Shipa Freight’s global study of 800 SMEs from developed and emerging markets, including 100 small and medium-size businesses from Indonesia, examines the trade patterns and barriers experienced by SMEs.
Despite their desire to export, 97% of small and medium-size businesses in Indonesia have faced difficulties when shipping internationally. Ninety-five percent believe their national government should offer more support and services to SMEs looking to ship internationally.
Ninety-five percent of Indonesian SMEs say that technology is levelling the playing field for them and allowing them to operate globally.
“The logistics industry has traditionally ignored SMEs and done far too little to help them find new markets and grow,” says Paul Rehmet, CEO of Shipa Freight, the online freight service powered by the Agility network. “Technology is giving them the ‘virtual’ scale that they’ve needed to lower their costs, get real-time information and compete.”
The study reveals that 62% of Indonesian SMEs are prioritizing export markets over their home market.
For Indonesian companies, the market with the most potential for growth is Asia Pacific (60%), closely followed by Europe (58%); however, exporting to Europe also poses the biggest challenge, with more than four-fifths (82%) of Indonesian SMEs finding this region the most difficult region to export to.
Unfortunately small and medium-size businesses in Indonesia are having to navigate widespread trade difficulties – bureaucracy, pricing confusion, political and economic risk — in pursuit of global growth; this is concerning given 87% say that if they don’t export more they won’t be able to grow – the highest of all the markets in the study.
When it comes to shipping, their number one concern is foreign exchange loss (71%), followed by goods being lost or damaged (64%).
For Indonesian SMEs finding a good logistics partner and international laws and compliance issues are the top challenges (72%). Cargo being stopped in customs has been the greatest difficulty small business leaders in Indonesia have faced (62%), closely followed by costs being too high and them not having an accurate picture of costs (57%).
Globally, smaller companies account for an estimated 95% of all businesses and employ two-thirds of the world’s workers. Critics of globalization have argued that decades of efforts aimed at easing the flow of goods, capital and jobs across borders has come at the expense of SMEs and disproportionately benefited multi-nationals and other large businesses.
“Smaller businesses used to think they couldn’t compete in trade. Now many see it as their best path for growth,” Rehmet says. “SMEs are not naïve about the obstacles to unlocking new markets. They know more needs to be done to empower them to trade internationally, as the business and social benefits for economies are huge. This is where technology is changing the game, with online tools enabling SMEs to conduct transactions, get financing and gather market intelligence.”
New tech boosts export prospects
Smaller companies in Indonesia see technology as a way to close the gap with bigger competitors, and get quick access to competitive shipping options; 97% believe technology is transforming the logistics industry.
Indonesian SMEs are already embracing digitization, with more than a third (35%) using an online rate quotation and booking tool.
About the study
Shipa Freight’s Ship for Success research examines the trade patterns and barriers of SMEs, defined here as organizations with 10-250 employees. The opinion research was conducted in winter 2017 amongst 800 companies (400 exporters and 400 importers). There were 100 respondents from each of the following markets: UK, USA, Germany, Italy, India, Indonesia, China and UAE. Study participants included SME leaders, such as managing directors and operations directors. Participating companies were drawn from the following sectors: retail and fashion, fast-moving consumer goods (FMCG), automotive (including supply chain), industrial and manufacturing, and technology. You can explore the findings and download the full report on the Shipa Freight website.