SMEs in Japan expect revenue generated through exports to grow in 2017, however they see “lack of skilled personnel” as an obstacle, indicating a need for support from a reliable logistics provider and specialists well-versed in customs and related procedures.
This finding is according to a global research study commissioned by FedEx on the export behaviour of Small and Medium-Sized Enterprises (SMEs). Revealing insights into the export trends of 9,000 SMEs worldwide, the study shows skilled labour crunch.
It found that average export revenues for Japanese SMEs are US$663,000, representing 29 percent of the total revenues of all responding companies and a far lower percentage of revenues compared to the global average of US$1,504,000 (or 64 percent of total revenue) for the 17 markets surveyed.
That said, Japanese SMEs expect increased export revenue over the next 12 months, with 33 percent forecasting growth in exports within Asia Pacific, and 19 percent projecting growth in exports outside Asia Pacific.
Though optimistic that export revenues will grow, Japanese SMEs cite several challenges. In Japan the most common responses given for challenges faced are: Lack of skilled staff (37%), increasing production costs (32%), Greater competition – own country (30%), and Lack of knowledge – trade regulations (16%).
Japanese SMEs are considering various measures to overcome export challenges. Responses include plans to ‘Hire new talent with the right experience’ (26%), ‘Invest in research and development’ (23%), and ‘Invest in new technology’ (19%).
Moreover, many Japanese SMEs note the need for support from outside specialists, including “Outsourcing more services, e.g. logistics” (11%), as some believe ‘Logistics providers help them respond to new business challenges’ (23%).
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The study also examined trends regarding recently booming cross-border e-commerce. For 59% of Japanese SMEs, e-commerce generates an average of 17% of total revenue, a lower percentage than other markets. However, 25% forecast revenue generated from cross-border e-commerce to increase over the next 12 months.
As a result of the increased growth, Japanese SMEs identified their logistics needs as Faster delivery services (39%), Local customs expertise (28%), and Flexible delivery options (25%). 84% of all Japanese SMEs surveyed agree that logistics plays an important part in their export business.
The top export markets for Japanese SMEs are: 1) United States (31%), 2) India (25%), 3) Germany (18%), and 4) China, France, U.K. (14%). Among Japan’s largest trading partners, China has recently enacted repeated tax revisions affecting cross-border e-commerce, making it essential for many Japanese SMEs to understand the changing environment, such as revised trade regulations and new systems to promote smoother trade.
Selecting a logistics provider with specialists seasoned in international trade is one step in helping SMEs grow their business through international trade, including cross-border e-commerce.
Also read: Distinctively Unique, Yet Culturally Blended: From Japan to Singapore