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Asia SMEs see hard road ahead


Anticipating a slow economic recovery, SMEs want their respective governments to play a greater role in helping them through this challenging period and in particular, enhance their ability to access funding, according to results from the latest UPS Asia Business Monitor (UPS ABM) 2009, an annual survey conducted on competitiveness and issues facing SMEs in Asia.

The most pressing concerns cited by SME leaders this year are: overcoming the current economic downturn, managing cash flow and rising debt and coping with increasing costs. 63% of Asian SMEs said they intend to maintain staffing levels and will resort to other means to cope with the decline.

"This year's UPS ABM survey shows that SMEs have a tough road ahead. With SMEs making up 95% of all businesses in Asia Pacific, their desire to keep their workforce and at the same time, operate competitively is commendable. Their call for help should not go unheeded," said Derek Woodward, President, UPS Asia Pacific region. With 80% of Asia-Pacific's workforce employed by SMEs, their efforts to retain staff will play an important role in keeping the Asian economy stable. 71% of SMEs will tighten their cash management flow with the use of strict credit control and collection plans, 67% will reduce other costs such as rent and utilities, and 33% said they will reduce staff-associated costs, but not necessarily through downsizing.

Woodward said that the survey showed a fundamental shift in the mindset of Hong Kong SMEs, no longer looking to short term adjustments and waiting for the next boom cycle. "Hong Kong SMEs realize it is a strategic imperative to make fundamental changes to their businesses, and to do so now, so they can be well-positioned for the next phase of growth."

Meanwhile, cargo throughput at the Hong Kong International Airport fell 19.8% to 257,000 tonnes and air traffic movements declined 3.7% to 24,090, in comparison to the corresponding month in 2008. The contraction in cargo traffic was prominent in exports, recording a 27% year-on-year drop, in which cargo volumes to all major markets experienced a decline. Imports also shrank by 16% as compared to the same period in 2008, with cargo volumes from South East Asia and Japan decreasing the most. Transshipment cargo dropped around 7% year-on-year during the month, while the corresponding figures for Taiwan and the Mainland experienced double-digit declines.

Stanley Hui Hon-chung, Chief Executive Officer of the Airport Authority Hong Kong said, "The aviation industry worldwide is still yet to show signs of recovery as the gloomy economic outlook continues to dampen travel desire among consumers. This uncertainty has been further aggravated by the recent outbreak of the influenza A (H1N1).

"Cargo throughput remains the hardest hit in comparison to passenger volume and aircraft movements, reflecting the continued weakening of global trade and consumption," Mr Hui added. He also revealed that while cargo volume has seen a consistent drop of about 20% over the last three months—which is considerably less than the nearly 30% decline in December 08 and January 09—the performance remains worrying.