2015/SOM2/015 Agenda Item: 6.2 SME Internationalization and Measurement (Presentation) Purpose: Information Submitted by: Policy Support Unit, APEC Secretariat Second Senior Officials Meeting Boracay, Philippines 20-21 May 2015
SME Internationalization and Growth The 2nd APEC Senior Officials Meeting, the Philippines Denis Hew, PhD APEC Policy Support Unit Copyright APEC Secretariat Outline 1. SME internationalization activities 2. Measuring SME internationalization 3. Growth of SMEs in the APEC Region 4. Challenges in setting a target for SMEs in the region 5. Conclusions and recommendations 1
SME Internationalization Internationalization the process of increasing involvement in international markets. Direct exporting Direct importing SME internationalization activities Investment abroad Being subcontractors to foreign enterprises Having foreign subcontractors Cooperation with foreign enterprises Joint ventures Non equity alliances Licensing Franchising Measuring SME Internationalization Micro level Foreign markets, assets, sales, staff, affiliates, ownership, R&D, control of int l networks Macro level A. number of SMEs exporting directly and value of SMEs direct exports; B. number of SMEs importing directly and value of SMEs direct imports; C. number of SMEs investing abroad and value of SMEs investment abroad; D. number of SMEs being subcontracted by foreign enterprises and value of sales of SMEs being subcontracted by foreign enterprises; E. number of SMEs subcontracting foreign enterprises and value of purchase of SMEs from foreign subcontractors; F. number of SMEs cooperating with foreign enterprises under joint ventures, nonequity alliances, licensing and franchising and value of SMEs revenue from cooperation with foreign enterprises. 2
Measuring SME Internationalization Responses to Survey on SME Internationalization Indicators Number of SMEs exporting directly A Value of SMEs' direct exports (USD billion) Number of SMEs importing directly B Value of SMEs' direct imports (USD billion) Number of SMEs investing abroad C Value of SMEs' investment abroad (USD billion) Number of SMEs sub D contracting foreign firms Canada (2011) Japan (2011) Korea () Malaysia () Peru () Philippines (2010) Chinese Taipei () Thailand () United States (2012) 58,100 6,336* 87,800 >6000* 3,082 72,321** 68,639 24,944 298,000 150 95.9 43.4*** 1.6*** 1.2** 47.5 57.3*** 0.5*** 144,100 10,702 44,684 180,358 4,470 37,422* (1) 14,874 70.9 3.2*** 77.1*** 0.6*** 2.4 * The data covered SMEs in manufacturing sector only. ** The data covered SMEs in the following sectors: agricultural, forestry, fishery, manufacturing, wholesale and retail trade. *** The data covered trade in goods only. (1) In, Korea SMEs made 4,265 overseas investments and invested in 1,351 new overseas enterprises Measuring SME Internationalization Survey Approach The European Commission conducts an survey on internationalization of European SMEs. Every 3 years 9480 extended interviews Disproportional stratified sample Census Approach Japan utilizes the results from census to understand SMEs internationalization activities. Every 5 years Economic Census for Business Frame and Economic Census for Business Activity 3
Growth of SMEs in APEC Region Number of SMEs over the Years SMEs Share in Total Number of Enterprises APEC economies Years Number of years Trend Percentage change Share at the beginning 5 latest years with data Change over 5 years Australia 2010 2014 4 years 1.2 Canada 2012 7 years 5.8 99.73 2007 2012 0.13 Chile 8 years 15.9 85.23 2008 0.99 Hong Kong, China 2014 9 years 18.7 98.24 2009 2014 0.03 Indonesia 8 years 23.1 99.99 2008 0.00 Japan 2006 2009 3 years 0.2 Korea 2012 7 years 11.6 99.90 2007 2012 0.00 Malaysia 2011 6 years 17.7 Mexico 2003 10 years 39.9 99.80 2008 0.00 New Zealand 2012 1 year 0.7 Peru 2007 6 years 61.3 99.46 2008 0.00 Philippines 8 years 20.1 99.61 2008 0.02 Russia 2011 2 years 6.2 Singapore 2014 9 years 21.8 99.37 2009 2014 0.03 Chinese Taipei 8 years 8.6 97.70 2008 0.06 Thailand 2006 7 years 21.5 99.69 2008 2.53 United States 2007 2012 5 years 5.4 99.70 2007 2012 0.02 Viet Nam 2012 7 years 219.4 96.35 2007 2012 1.29 Growth of SMEs in APEC Region Number of SMEs Employees APEC economy Years Percentage change Number of years SMEs Share in Total Employment Share at the beginning 5 latest years with data Change over 5 years Australia 2009 5.1 4 years Canada 2012 48.8 7 years 64.0 2007 2012 25.90 Chile 23.1 8 years 46.2 2008 4.11 Hong Kong, China 2014 10.6 9 years 48.0 2009 2014 0.92 Indonesia 36.6 8 years 97.2 2008 0.16 Japan 2006 2009 1.6 3 years Korea 2012 25.0 7 years 88.4 2007 2012 0.70 Malaysia 61.9 6 years 58.9 2008 1.40 Mexico 2003 32.7 10 years 73.8 2008 2.40 New Zealand 2012 0.4 1 year Peru 2007 6.5 6 years 62.4 2008 1.65 Philippines 25.4 8 years 64.7 2008 0.99 Singapore 2014 47.7 9 years 69.4 2009 2014 3.60 Chinese Taipei 12.3 8 years 42.8 2008 1.07 Thailand 2006 28.8 7 years 76.0 2008 4.96 United States 2007 2012 6.4 5 years 49.6 2007 2012 6.35 Viet Nam 2012 126.2 7 years 53.3 2007 2012 8.30 4
Growth of SMEs in APEC Region SMEs Share in Economy APEC economy Measure SMEs' share Year 5 latest years with data Growth in 5 years Australia Industry value added 55.72 Brunei Darussalam Gross value added 17.30 2010 Canada GDP 27.00 2011 2006 2011 1.0 Chile GDP 18.90 2011 Hong Kong, China Value added 41.00 Indonesia GDP 60.34 2008 4.7 Japan GDP 54.55 2011 Korea GDP 47.70 2012 2007 2012 2.9 Malaysia GDP 33.10 2008 1.9 Mexico GDP 34.70 2008 New Zealand GDP 28.43 2011 Papua New Guinea GDP 13.30 Peru GDP 41.20 2007 Philippines Value added 35.67 2006 Russia GDP 21.00 Singapore GDP 45.80 2014 2009 2014 7.2 Chinese Taipei GDP 45.12 2011 2006 2011 1.2 Thailand GDP 37.40 2008 0.7 United States GDP 44.60 2010 2010 1.7 Viet Nam GDP 46.00 Distribution of SMEs by Size SMEs in the APEC region are mostly micro enterprises. Over years, the share of micro enterprises in total SMEs seems to be stable. APEC economy Year Medium Small Micro Australia 2014 2.5 9.5 88.0 2010 2.3 8.9 88.8 Brunei Darussalam 2010 33.2 66.8 Canada Chile Indonesia Japan Korea Malaysia Mexico Peru Philippines Russia 2012 2012 2012 2011 1.6 3.2 0.1 13.2 2.8 3.1 0.8 0.2 0.4 0.2 21.1 1.1 10.1 20.0 3.7 4.7 9.3 4.2 98.4 75.1 98.8 86.8 87.0 77.0 95.5 95.2 90.3 95.6 2006 2006 2003 2007 2011 2.2 2.4 0.2 12.7 3.2 2.3 0.9 0.2 0.4 0.3 16.2 3.6 8.6 18.4 3.9 4.6 8.0 4.1 97.8 81.4 96.2 87.3 88.1 79.3 95.2 95.3 91.6 95.7 Singapore Thailand Cold chain Cold chain SMEs 4.7 15.7 79.7 4.1 15.7 80.2 0.5 99.5 2006 0.4 99.1 United States 2009 1.7 22.2 75.7 2011 2.5 30.0 67.5 Viet Nam 2007 2.7 34.0 63.3 5
Challenges in Setting a Target for SMEs in the Region Differences in SME definition > Non comparable SME statistics 1) SMEs are defined by different numbers of employees, different level of sales, assets, and capital; 2) non employing enterprises are treated differently by APEC members; 3) informal sector enterprises are also treated differently by APEC members Macroeconomic background > Number, employment, economic performance of SMEs fluctuate Lack of impact assessment on SME related initiatives > unclear linkage between policies and initiatives and growth of SMEs Conclusions & Recommendations Conclusions: On internationalization, SMEs exhibit dynamism and diversity. It is challenging to measure SME internationalization. Economies could conduct surveys or censuses to measure SME internationalization. There is a growing number of SMEs and people employed by SMEs, but SMEs share in total number of enterprise and economy seems to be declining. Micro enterprises make up the majority of SMEs. Recommendations: Strengthen capacity to collect SME statistics in the APEC region Address challenges in setting a target for SMEs 6
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