SMEs need link to big businesses’

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Wednesday, June 18, 2014


SMALL and medium enterprises (SMEs) are encouraged to partner with big companies that have plans to expand in the Association of Southeast Asian Nations (Asean) so they could take advantage of the 600-million consumer market, speakers at a recent Entrepreneurship Forum said.

Jay Yuvallos of the Asean Business Advisory Council (Asean-BAC) Philippines dismissed claims that only bigger companies would benefit from the regional economic integration in December 2015. He said all businesses, regardless of size, have good chances during the market integration.

Alma Jimenez of the Management Association of the Philippines (MAP)-Asean Integration Committee said there are several ways that SMEs, especially those that lack of resources, can take advantage of a unified market.

“SMEs can participate or be part of the supply chain of bigger companies so they too can be part of the market integration,” said Jimenez. “It is just a matter of selecting which company to partner with,” she added.

Efficiency

Federico Macaranas, professor at the Asian Institute of Management, said SMEs should improve their operations so big companies would welcome them.

“They should be more efficient and embark on green supply chain initiatives so they can ride the Asean wave,” he said.

Jimenez cited other strategies such as creating linkages; creating industry alliances by sector, industry or product type; and networking.

“Asean is getting more attractive that China gives huge benefit for aggrupation. It gives us leverage to be better and stronger in the AEC (Asean economic community),” Yuvallos said.

Yuvallos, who represent the SME sector in the Asean-BAC Philippines, noted that 89 to 99 percent of firms in the Asean are SMEs.

The SME sector employs 52 to 97 percent of the region’s work force and contributes between 23 percent and 58 percent to the gross domestic product (GDP). SMEs also produce 10 percent to 30 percent of total exports.

Single market

The Asean community hopes to create a single market and distribution base, a highly competitive economic region with equitable economic development and full integration into the global economy.

Based on the study conducted by the Economic Research Institute for Asean and East Asia, there will be four high-income countries in the Asean by 2030 and three middle-income economies.

“It wouldn't be easy to get there but to attain these goals, there should be concerted effort, political will and private sector support,” said Yuvallos quoting the study.

To achieve targets and be recognized in the Asean, the Philippines should have a strong country brand, said Junie del Mundo, chief executive officer at EON and
governor of MAP.

He said a strong brand can contribute one to five percent to the gross national product (GNP) of the country. He said countries with strong brands see the value of their products go up.

“Samsung, which contributes 25 percent to Korea's GNP, the spread of Koreanovelas and Kpop music, and even PSY's Gangnam style were strategies to increase the value of South Korea. These were all part of their 10-point branding program,” he noted.

Del Mundo said the Philippines’ core advantage rests on the creativity and willingness to collaborate of Filipinos.

“The challenge now is build a holistic campaign that reflects product, policies, people, and investment,” he added.

According to Brand Finance, the Philippines ranked 36 in the overall ranking and top five in the Asean rank. The country's brand value stood at $193 billion with a brand rating of A.

However, its neighboring countries like Singapore ranked 24 in the overall ranking and top one in the Asean. It has a brand value of $404 billion and a brand rating of AA+.

As companies leverage on the upcoming market integration, Mundo suggests they should audit their environment, build brand and roadmap and communicate. He also advised firms to be present online.

“If your clients can't Google you that could mean you don't exist,” he said. KOC

Published in the Sun.Star Cebu newspaper on June 19, 2014.

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