In Southeast Asia, there are a lot of small and medium-sized enterprises (SMEs). In fact, there are more SMEs in this region than any other region in the world. This is because many countries here have been able to develop economically and socially at a fast pace through a mixture of low labor costs and a pool of talented labor.
Many of these countries have also been able to reduce their dependence on exports by developing their own industries which have allowed them to become more self-reliant. With this new found wealth, many entrepreneurs have been able to create innovative products and services for export as well as for home use.
Before we get into the best ways to help your SME grow, it is important to understand the difference between a small and medium-sized enterprise.
A small enterprise has a turnover of less than five million US dollars and typically employs 10-50 people. A medium-sized enterprise is generally between 10 million US dollars and 500 million US dollars and has between 100-500 employees. SMEs are usually larger than their big-name competitors which is why many of them are successful.
Why Southeast Asia Is a Hotbed For SMEs
Worldwide, small businesses are finding it hard to grow as economies get more competitive and smaller firms are struggling to stay afloat. But in Southeast Asia, there are a lot of entrepreneurs who have been able to combine tradition with innovation and provide customers with unique products and services.
A good example of this is the handicrafts made in Thailand. The quality of these crafts is world-class, and Thailand now exports a wide range of handicrafts to developed countries. And with a growing demand for handicrafts, there are more and more entrepreneurs in this country who are seeing potential for their businesses to grow.
Another good example of this is Vietnam. This country has also seen an explosion in the number of entrepreneurs creating innovative products for export.
With many great business options available in Southeast Asia, there is no shortage of opportunity to do well in this region. One of the key advantage is the ability to move goods and services across borders with a relatively low cost.
Many countries in Southeast Asia are moving toward a free market economy and improving the ease of doing business. In this regard, Brunei and Singapore have consistently ranked among the top on the ease of doing business survey by the World Bank. As a result, companies with offices in these countries have been able to grow quickly and enjoy access to many global markets.
For businesses who have chosen to expand into new markets, Southeast Asia has the potential to provide them with new opportunities to thrive.
Low Labor Costs
Many of the small and medium sized enterprises (SMEs) in Southeast Asia specialize in either traditional products or service industries. A low labor cost means that the cost of starting a business is much cheaper in Southeast Asia than it is in many other parts of the world.
This in turn has enabled businesses to become very successful in this region. Many entrepreneurs are able to generate enough profit to take off and grow and then a few years later, open up another branch of the business which has grown to become another successful company.
Southeast Asia is one of the most competitive regions in the world and it is here that a lot of new entrepreneurs have taken the risk to start their own business.
Pool of Talented Labor
Southeast Asia has a lot of talented workers. They are in demand all around the world and they are used to working in a range of jobs including writing, coding, management, designing, and many more. So it is not surprising to hear that the region has created a wealth of globally competitive and innovative products.
Companies in Southeast Asia have been very quick to embrace technology, which means they have been able to stay ahead of the curve. This has been done by developing innovative solutions to existing problems. Many of the products and services that are created and put to use here are first rate and can be found all over the world.
Low Dependence on Exports
Like most countries in Southeast Asia, most Southeast Asian countries are heavily reliant on their exports. Southeast Asia sends a huge amount of its products to China, India, the United States and other countries around the world. Most of these exports consist of commodities which are of low value but there are also a large amount of manufactured goods which have low value but high volume.
This means that with countries like the United States having a strong dollar and a tough time competing with cheaper Chinese goods, these countries rely on Southeast Asia to bring in their products.
According to IHS Markit, Indonesia’s exports alone were around $186 billion in 2019 and Thailand exports were around $249 billion.
Southeast Asia has no formal trade agreements with many countries and therefore must rely on tariffs to charge duty on imports. This makes it difficult for exporters to receive remittance or do business outside of the region.
This also means that many companies rely on domestic sources of funding, rather than international banking systems. As a result, local banks have a much lower appetite to fund businesses that do not have the capital backing.
This is one of the reasons that the region has become so highly dependent on foreign business, not just from large corporations but also from SMEs.
Many small and medium-sized enterprises in Southeast Asia source their products and services from foreign markets in the form of exports.
Southeast Asia is an ideal place to make money. Whether you’re looking to start an SME or expand your company, the region is sure to be your next great market.
In fact, the region could be the next big market for your company as it is growing in terms of wealth and talent. If you’re looking to expand your business in Southeast Asia, you’ll be in the right place at the right time.
In order to succeed in this market, you’ll need to look for markets that allow you to adapt to the changing demand of your customers.
The Asia Pacific region is a huge economic area which has the potential to bring in plenty of money. With this, many companies are looking to capitalize on this market by creating more services and goods that could be sent back to Western markets.