FedEx Express (FedEx) said Southeast Asia emerged as the top growth market for the Asia Pacific region, according to the results of its latest research, which it conducted with Forbes Insights.
The report — aimed to identify key international growth trends for small and medium-sized enterprises (SMEs) in the Asia Pacific region over the next three years — found that 68% of respondents see the greatest potential for growth in Southeast Asian countries such as Thailand, Vietnam, and Indonesia.
According to the report, "Economic growth, cultural affinities and improving regional trade deals are fuelling optimism around ASEAN markets."
It added that while 88% of those surveyed said that they were planning customer base expansions globally over the next three years, APAC business leaders find it harder to do business with partners, suppliers, and customers in markets like Europe and North and South America.
"Challenges remain for truly realizing cross-border opportunities even within the APAC region," the FedEx report said.
"When asked about barriers to international expansion, half of the respondents cited complex customs requirements and documentation as their primary hurdles ahead of finding new customers (45%) and finding partners or suppliers in global markets (42%)," it added.
With limited in-house trade compliance expertise, navigating different customs regulations across markets remains complicated, according to those surveyed.
Economic headwinds pose challenge to Asia's SMEs
"Our data shows that economic headwinds and global competition are seen as the most pressing business challenges for Asia's SMEs today," said Kawaal Preet, president of FedEx Express's Asia Pacific, Middle East, and Africa region.
"Southeast Asian markets are currently growing faster than in many other marts of the world, so it makes sense for them to focus on intra-Asia trade," she added.
Nonetheless, despite the rising number of regional and bilateral trade agreements, there remains work to do in surmounting barriers to entry into international markets.
According to Ross Gagnon, executive director of Research, Forbes Insights, "the findings provide valuable insights into high-growth areas and the continuing barriers facing export-driven SMEs. Collaborations focused on unlocking border compliance and bridging digital divides will be key to realizing their international ambitions."
Enhancing the customer experience was the most highly ranked business priority for SMEs (57%). While small businesses typically invest only 5% of the total revenue of their annual IT budget on digital transaction capabilities, digital technology was seen as instrumental in tackling customer experience challenges by applying analytics, machine learning, AI, real-time tracking and visibility solutions and technology training to upskill employees.
The FedEx report said that although technology's potential is clear, nearly three-quarters (71%) of respondents stated that developing or implementing a digital strategy was their biggest challenge, followed by mitigating security threats (65%) and the cost of upgrading existing systems (64%).
The survey polled 250 small and mid-sized business leaders, including founders and C-suite executives, across a range of industry sectors in the Asia Pacific region.