Signed, sealed, FedEx de­liv­ered

The spot­light is on SMEs in the Asia Paci­fific, as ex­press de­liv­ery gi­ant FedEx seeks to in­tro­duce to the re­gion its unique brand of value ad­di­tion. Emma Dai spoke with the re­gional pres­i­dent.

China Daily (Canada) - - HONG KONG -

Eye­ing growth in the Asia Pa­cific, the pur­ple-tailed fleet of FedEx, the ex­press trans­porta­tion com­pany, is tak­ing off to help small and medium-sized en­ter­prises (SMEs) in the re­gion ex­pand their busi­ness to the world.

“We are very in­ter­ested in small and medium en­ter­prises, be­cause this is where FedEx can bring in par­tic­u­lar value,” said Karen Red­ding­ton, pres­i­dent of FedEx Ex­press Asia Pa­cific, who took over the helm a year ago.

Orig­i­nally from the UK, Red­ding­ton be­gan her ca­reer at FedEx in 1997 as an op­er­a­tions re­search ad­vi­sor in Hong Kong, where the ex­press com­pany’s Asia Pa­cific head­quar­ters has been lo­cated since 1984.

FedEx Ex­press, a sub­sidiary of the New York-listed FedEx Corp, flies more than 400 times a week to more than 30 coun­tries in Asia Pa­cific. The com­pany em­ploys nearly 18,000 work­ers in the re­gion and more than 1,250 in Hong Kong, from where its flights reach out to more than 220 coun­tries and ter­ri­to­ries world­wide.

“Lots of SMEs have great prod­ucts and ideas. One thing they want to do is to bring it global. But they of­ten need a trusted part­ner to help them man­age cross-bor­der com­merce in terms of cus­toms clear­ance and re­turns pro­cess­ing. We see our­selves play­ing a big role in help­ing SMEs get to over­seas mar­kets and grow,” Red­ding­ton told China Daily.

A sur­vey con­ducted by FedEx found last Novem­ber that SMEs are the driv­ing force for eco­nomic growth in the Asia Pa­cific. Th­ese com­pa­nies ac­count for 98 per­cent of all busi­ness in the re­gion, com­pared with 90 per­cent world­wide. Hong Kong, the Chi­nese main­land and Sin­ga­pore are the top three ac­tive mar­kets, with 50 per­cent, 35 per­cent and 41 per­cent SMEs in­volved in ex­port busi­ness.

The sur­vey also found that in six key mar­kets in the re­gion, 22 per­cent of ex­port­ing SMEs re­ported they were “grow­ing rapidly”, com­pared to just 11 per­cent of do­mes­ti­conly SMEs putting them­selves in that cat­e­gory.

How­ever, on av­er­age, only 36 per­cent of SMEs in the Asia Pa­cific trade with over­seas mar­kets, de­spite more than dou­ble that pro­por­tion, or 77 per­cent, rec­og­niz­ing that the op­por­tu­ni­ties are sig­nif­i­cant.

Red­ding­ton said many SMEs are hes­i­tant be­cause they are con­cerned about the var­i­ous kinds of bar­ri­ers to cross-bor­der trad­ing.

“Hav­ing as­sur­ance is very im­por­tant. Your abil­ity to de­liver re­li­ably to your con­sumer re­flects your busi­ness,” Red­ding­ton said. “The one thing SMEs need, above all, is know­ing that they can prom­ise their cus­tomers ‘I’ll have that with you on Wed­nes­day’, and their lo­gis­tic part­ner can get their prod­ucts there on time, in one piece.”

An­other key thing to know, ac­cord­ing to Red­ding­ton, is how to get through dif­fer­ent reg­u­la­tory re­quire­ments across mar­kets.

“Cross-bor­der com­merce is very con­fus­ing and com­pli­cated. Ev­ery coun­try has dif­fer­ent reg­u­la­tions and cus­toms regimes. Hav­ing a part­ner who could help you un­der­stand that is very im­por­tant.”

Mean­while, in the era of e-com­merce, re­turn pro­cess­ing, which could be com­pli­cated, is also be­com­ing a cru­cial fac­tor. “A lot of peo­ple will make their fi­nal de­ci­sion on whether to buy on (the ba­sis of ) whether they can eas­ily re­turn the ship­ment,” she pointed out.

Red­ding­ton said FedEx is re­spond­ing to th­ese con­cerns by pro­vid­ing value-added so­lu­tions to SMEs. It holds sem­i­nars with the Asian De­vel­op­ment Bank to ex­plain what they need to do to en­gage in cross-bor­der trad­ing. It of­fers a va­ri­ety of choices in terms of de­liv­ery speed, from FedEx In­ter­na­tional First — the first thing in the morn­ing — to FedEx In­ter­na­tional Econ­omy, a bit trade off if you are not so much in a hurry.

It has also rolled out the Re­turn La­bel, where parcels with such tags can be eas­ily sent back by re­ceivers. “It has been very well re­ceived,” Red­ding­ton noted.

Al­though the Asia Pa­cific has lately been fac­ing a lot of mar­ket volatil­ity and growth de­cel­er­a­tion, Red­ding­ton said she is not un­duly con­cerned and that she be­lieves eco­nomic ac­tiv­i­ties in the re­gion are still vi­brate and the de­vel­op­ment po­ten­tial bright.

“Growth in China and other Asia Pa­cific emerg­ing mar­kets are still good, (rates) which many re­gions in the world would be happy with,” Red­ding­ton said.

“We are also see­ing quite a nice pickup in the Asian tigers (such as Malaysia), and Viet­nam as well. We are ex­pect­ing growth for the Asia Pa­cific to stay be­tween 5 and 6.5 per­cent from now to 2017. I’m very pos­i­tive about the re­gion. There are still good op­por­tu­ni­ties.”

And a ma­jor driver of fu­ture growth is be­lieved to be e-com­merce. Ac­cord­ing to New York-based re­search firm eMar­keter, global on­line pur­chases by 2019 will reach $3.551 tril­lion, or 12.4 per­cent of to­tal retail sales of an es­ti­mated $28.55 tril­lion.

That is more than dou­ble of the es­ti­mated on­line spend­ing of $1.672 tril­lion by end of 2015. The Asia Pa­cific is ex­pected to grow faster than any other re­gion at an an­nual rate of 35.2 per­cent.

“As a provider of lo­gis­tic ser­vices and con­nec­tor of trade, to get that sort of growth, to take it from vi­sion to re­al­ity, we are go­ing to need strong in­fra­struc­ture de­vel­op­ment, along­side with a reg­u­la­tory en­vi­ron­ment that sup­ports and en­cour­ages rapid eco­nomic growth,” Red­ding­ton said, adding that this would in­volve in­vest­ments in large sort­ing fa­cil­i­ties and con­nec­tiv­ity to th­ese fa­cil­i­ties.

With re­gional air cargo hubs in Guangzhou, Osaka and Sin­ga­pore, FedEx will be open­ing one more hub in Pudong, Shang­hai, in early 2017. The new fa­cil­ity, built with an in­vest­ment of $100 mil­lion, is ex­pected to more than triple the com­pany’s cur­rent ca­pac­ity in Shang­hai, al­low­ing FedEx to process up to 36,000 parcels per hour.

“Apart from that, what you re­ally need is reg­u­la­tions that smooth cross-bor­der trade. A good sam­ple is de min­imis value,” Red­ding­ton said, re­fer­ring to the max­i­mum tar­iff free value al­lowed in cross­bor­der trad­ing.

She added that while Hong Kong is the free-trade hub for the re­gion and Aus­tralia has an “ex­tremely high” thresh­old of A$1,000 ($723), the rest of the re­gion is not so trade-friendly. Ex­porters are of­ten re­quired to file hard­copy pa­per­work to cus­toms and some­times other agen­cies such as quar­an­tine de­part­ments as well.

“For SMEs, that be­comes ad­min­is­tra­tive bar­ri­ers and weighs on ex­pense,” Red­ding­ton said.

“Some­where like Sin­ga­pore is very pro­gres­sive in terms of al­low­ing elec­tronic fil­ing. You just need to file once for sub­mis­sion to many dif­fer­ent agen­cies. That’s the kind of long-term vi­sion that a lot of play­ers in the in­dus­try have.”

And multi­na­tional trade agree­ments are also ex­pected to make cross-bor­der ship­ping eas­ier, no mat­ter whether it is the Trans-Pa­cific Part­ner­ship, signed on Feb 4 by 12 coun­tries ac­count­ing for 40 per­cent of the global econ­omy, in­clud­ing the United States, Aus­tralia and Ja­pan, or the pro­posed Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship (RCEP), a free-trade agree­ment be­tween 16 coun­tries in­clud­ing China and 10 As­so­ci­a­tion of South­east Asian Na­tions (ASEAN) mem­bers.

Red­ding­ton ex­pects th­ese agree­ments to make cross-bor­der trade flows faster, cheaper and life for SMEs eas­ier, and added that FedEx acts like a spokesper­son for SMEs dur­ing ne­go­ti­a­tions, in or­der to help pol­icy mak­ers un­der­stand chal­lenges faced by the busi­ness com­mu­nity.

“We try to make sure coun­tries make well-in­formed de­ci­sions about reg­u­la­tory changes,” Red­ding­ton said.

“We bring all the facts to the ta­ble so peo­ple can see the big­ger pic­ture, that if you make trade eas­ier, you can en­cour­age growth, which will ben­e­fit all par­ties. So the pie be­comes big­ger and ev­ery­body gets a share.”

Con­tact the writer at em­madai@chi­nadai­lyhk.com

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