There is no global standard definition of a small and medium-sized enterprise (SME). Some indices are used to define SMEs by number of employees (most common), production capacity, fixed assets, shareholders funds and sales volume. In China, medium enterprises employ between 101 to 500 employees. In Singapore, SMEs providing services employ less than 200 employees. In the US, manufacturing SMEs employ less than 500 employees.

A University of Wollongong (NSW, Australia) study reported that SMEs play a larger structural role in Taiwan, China, Japan, Thailand and Vietnam, where they contribute more than 70% of employment, than they do in Indonesia or Malaysia, where they contribute only about 40%.

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In addition, the contribution of the SME sector to exports, and hence the extent of their global integration, varies widely. They are relatively more export oriented in China, Korea and Taiwan than they are in Japan, Indonesia, Thailand, Malaysia and Singapore.

On March 8, ministers of the Asia Pacific Economic Co-operation (APEC) member countries and their representatives, responsible for 21 economies, met in Hobart for the 14th APEC SME Ministerial Meeting. They agreed that SME growth would be stimulated by:

  • reducing transaction costs and red tape imposed by governments, such as making it easier to start and grow a business;
  • encouraging innovation;
  • saving time for SMEs, for example encouraging the use of e-commerce and online transactions with government;
  • better understanding and management of intellectual property rights;
  • encouraging SMEs to consider internationalisation.

 

This article focuses on internationalisation and makes an attempt to understand a typical Asian SME boss’s mind, through an interview of Elim Chew, managing director of Singapore’s 77th Street, a street wear retail fashion chain serving the hip and trendy youth culture segment with street wear fashion. Under the guidance of Ms Elim, 77th Street became the first fashion retailer to win the prestigious Singapore Promising Brand Award, Most Distinctive Brand 2004, conferred by ASME and Lianhe Zaobao.

 

Q What is driving your Asia investment and expansion? How important is Asia to you?

A Asia is a fast-growing economic powerhouse, especially in China and India. Most other Asians countries are also enjoying surging economies and thus it made sense to tap into the Asian markets.

We have a shopping mall in Beijing called 77th Street Plaza, all poised for the Beijing Olympics next year. We plan to duplicate this concept in other parts of China and India, and to appoint franchisees in Asian countries.

Q What are your company’s strategic intentions when investing overseas?

 

A The intent is to spread our retail outlets and malls with the concept of youthful vibrancy. We will certainly welcome co-operation and strategic alliances with anyone who has synergy with our vision.

Q How would you explain your company’s general approach to Asia investment? What is your Asia investment experience?

 

A The planning of investment will be largely focused on the return of investment. Our Asia experience was a steep learning curve initially. However, the learning curve is almost over.

Q What is attractive and unattractive about doing business in Asia?

 

A The attraction is that the market is huge, the potential is astronomical. The cost of doing business is also low in many countries although they are rising rapidly in the faster developing cities. The downside is that the learning curve is also huge. And in some countries, the rule of law is blurred and this can make business decisions guess work.

Q How do you train and equip your people before sending them out to new Asia locations?

 

A We rarely send Singaporeans to other locations because the thinking is that the locals know their own market and psyche better.

Q What other advice would you share about investing and doing business in Asia?

 

A The usual, which you learn in business schools. Plan, plan and plan, and then execute the plan. Then tweak it until it becomes a success formula.

Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asia market research and investment/trade promotion services.

E-mail: Lawrence@asiabizstrategy.com