Strategy

How infrastructure is transforming and empowering SMEs

By Karen Reddington, President, Asia Pacific, FedEx Express

When most people think of infrastructure, a clear picture of new roads, rail lines, airports, power supplies and communication networks comes to mind.

But the power of infrastructure goes way beyond that.

Modern, efficient infrastructure is powering and transforming economies, improving connectivity and boosting competitiveness.

Asia has greatest need for infrastructure investment

The G20 Global Infrastructure Hub outlook expects the world will need US$94 trillion of infrastructure investment by 2040. More than half of that is needed in Asia – particularly China, India and Japan. The Asian Development Bank estimates the entire Asia Pacific alone needs US$1.5 trillion annually in infrastructure investment until 2030 to keep pace with economic growth.

Infrastructure building is all about improving connectivity, and FedEx is supportive of efforts to connect the world and drive increased trade. For instance, the new route from our APAC hub in Guangzhou to our World Hub in Memphis gives Asia-Pacific companies a direct connection to reach customers in North America and beyond. We have also expanded our regional hubs in recent years – from Singapore to Shanghai and Osaka – by pioneering new technology and infrastructure to facilitate trade, especially for small to medium-sized businesses (SMEs).

SMEs – If you build it, they will come

The transformational power of all kinds of infrastructure has levelled the playing field for lots of smaller companies. Every day we assist SMEs to step up – whether through new land and air routes, or digital technology such as e-customs – to access world markets which were once unattainable.

More than 98% of all businesses in Asia Pacific are SMEs who depend on modern supply chains and infrastructure to sell and compete in the global marketplaceThat’s particularly important as Asia continues to post explosive e-commerce growth.

Asia remains the world’s largest e-commerce market– with retail e-commerce sales jumping more than 30% in 2017 to US$1.3 trillion, with almost 83% of that from China alone. Cross-border trade in e-commerce is one of the biggest areas of growth and opportunity.

At least 70% of global online shoppers have made a cross-border purchase, and Asia-Pacific saw the biggest year-on-year increases in 2017, led by India, China and South Korea. The supply chains which serve this booming cross-border e-commerce trade have changed markedly – and transport alone is not enough.  Global cross-border e-commerce must be supported by a highly complex ecosystem.

It’s this digital infrastructure which is helping to transform Asia’s SMEs by giving them a springboard to new business across the world.

Digital opens new doors for SMEs

From secure digital payment systems to fulfilment, tracking, returns, and shopping cart management – SMEs can now access the right intelligence and integrated solutions to expand choice, flexibility and service experience overall.

FedEx is investing in a multitude of innovative technologies – including Artificial Intelligence, Internet of Things, big data and more.  But at the heart of our SME focus is ensuring the right infrastructure to help deliver global e-commerce. That’s why we support region-wide initiatives to nurture a future-ready workforce for the new disrupted economy, by putting in place the right digital framework and digital business-friendly regulation.

Integrating Physical and Digital Infrastructure is Key

The latest ASEAN SME Transformation Survey said SMEs who are open to innovation and transformation, raising efficiencies, attracting talent and strengthening their offerings are the ones most likely to thrive in the digital economy. It found 60% of ASEAN SMEs are now keen to invest in technology to drive business performance, giving priority to IT such as software over conventional fixed asset spending.

Yet for all the amazing results from digital investment so far, lasting economic transformation can only happen by fully integrating both the physical and digital elements of infrastructure.

There are no apps or innovations that can replace aircraft, trucks or other infrastructure that underpin the physical transportation and delivery of goods.But together, physical and digital infrastructure can deliver a sustainable future for Asia’s SMEs, one that provides for more inclusive growth than ever before.

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