THE GROWTH OF SMEs
With the launch of the Asean Common Market in 2015, what are the prospects for Indian SMEs to penetrate that market?
Banerjee:Essentially the Asean Common Market creates a
market of around 4 billion consumers, making it the largest
single area of economic activity in the globe. With two of the
BRIC nations in this common market, it creates tremendous
opportunities for SMEs not just Indian but also Chinese, Thai,
Malay, Indonesian, Philipino, Singaporean and others to cater
to a wider audience. For the Indian SMEs in particular, it
creates opportunities to improve the quality of their product
and servicing offerings and compete on a global scale. With
technology giants like IBM making noises to use their war
chest to acquire firms in India to actively participate in the
SME market segment, the opportunities for atleast Indian ISVs
catering to the SME segment are very high. But, this is not simply
restricted to technology.
Global companies will be using the acquisition route to actively
participate and play in the Asean market.
Sharan: Customs duty barriers historically in Asean have been significantly higher than rest of the world with duties touching 50 percent plus in some cases. This has been one of the major bottlenecks in this “collaborative” environment where value addition with price performance drives the market fiercely. With the “zero” duty regime signed recently and a common market, this relatively under leveraged market will see major trade boom – both between each other as well as globally as a value added Made in “Asean” brand.
What are the major factors that an Indian SME would look at
before entering the ASEAN market ?
What are the advantages and disadvantages for Indian SMEs doing business in ASEAN ?
Banerjee: There are no disadvantages as such, the opportunity cost for not participating in a global market is enormous. I am assuming that this is not lost on our SMEs. Some of the more enlightened ones have already taken a leadership position in this. There is a feeling that this common market creation will separate the men from the boys.
Sharan: Advantages – this is the first step for Indian SMEs to go “global” in a controlled environment with minimal risks. It also allows a more fair play as many Indian bottlenecks of labor laws, capital scarcity and challenging infrastructure would not be there, allowing for full potential initiatives. Disadvantage- lack of global management practice, inability to work in teams with almost disdain for compliance.
What would be the preferred headquarter location in Asean for an SME to do business? What would be the important factors to be considered in making that selection? Are there any countries that are especially appealing at this time and why?
Banerjee: There is no one answer for this, because it is going to be industry and geography specific, some folks in manufacturing would prefer to go to either Malaysia or around Shanghai, some in semiconductor design may want to go to Taiwan or Korea, whilst some in retail may want to go to Singapore or Philippines’, others in oil and gas may prefer Indonesia, folks from agri industry may prefer Vietnam. Singapore is increasing by becoming a gateway to India.
Sharan: For many Indians, Thailand would be the preferred
location within the Asean region. Indians share social, cultural
and spiritual beliefs with Thailand and there is an innate sense
of bonding and comfort and to me this is a strong point infavor
of Thailand. On top, Thailand offers a large God fearing, educated
and disciplined work force. Indian SME’s have struggled
with these inadequacies and such support will catapult operations
to the next level.
Sharan: Indian entrepreneurship, the never say die attitude, strong multitasking, survival instincts, backed with strong technical and professional legacy is what Indian SME’s bring pretty fresh and strong on the table. Ability to fire fight and work against all odds using street smart innovation ( jugaad) is another thing pretty unique that Indian SME’s will bring to Asean region.
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