Deloitte has unveiled an insightful new report shedding light on the transformation of micro multinational companies (micro-MNCs) in Asia Pacific (APAC) as they increasingly embrace digital technologies and ramp up investments in branding. The buoyant outlook on cross-border e-commerce and digital trade radiates optimism amidst the global economic turbulence.
The comprehensive report, titled “Going-Global: Seizing the Next Great Opportunity in Digital Trade”, crafted with WorldFirst, underscores the robust role of APAC in driving global economic momentum. Despite geopolitical tensions and rising protectionism, the region continues to be a powerhouse, contributing around 40% to the global trade in goods. A mammoth leap from $13.7 trillion in 2013 to nearly $18 trillion attests to the region’s unwavering dynamism. WorldFirst, renowned for its integrated digital payment and financial services tailored for global businesses, particularly SMEs, co-authored this revelatory study.
A striking 71% of the surveyed micro-MNCs — those engaged in cross-border e-commerce and digital trade — express unwavering confidence in the burgeoning prospects over the forthcoming year. This confidence springs from supportive market dynamics, progressive policy environments, and accelerating technological advances, all hinting at a surge in market expansion, sales, and profit margins.
In tandem, an overwhelming 88% of the companies underscore the critical importance of branding in nurturing long-term growth. By carving out a distinctive competitive edge and bolstering customer loyalty, branding emerges as an indispensable pillar for securing more substantial market shares. Consequently, a substantial 68% of these enterprises are gearing up to heighten their investment in branding.
The report also spotlights Thailand’s brisk digital metamorphosis, spurred by robust infrastructure investments in cloud computing, AI, and the imminent rollout of 5G. Major tech players and supportive government policies are turbocharging the country’s digital ecosystem, amplifying cross-border e-commerce activities. Thai businesses are enthusiastically leveraging AI tools and automation technologies, effectively trimming operational costs and dismantling business barriers.
Thailand’s digital domain, underpinned by solid internet infrastructure, unfurls a tapestry of immense investment potential. The nation is innovatively expanding its digital payment network, PromptPay, across eight countries and forging QR code-based payment links with economic giants like China. Complementing these strides, the Thai government envisions the e-commerce sector ballooning to over 7.1 trillion baht by 2027, buoyed by a resolute 10% annual growth rate. The second phase of the National E-commerce Development Action Plan (2023-2027) homes in on enhancing digital skills, promoting data sharing, bolstering transaction security, and widening the horizons of online trade both domestically and globally.
At Money Expo Bangkok 2024, Thailand’s steadfast commitment to digital finance was prominently showcased, with over 320 million digital accounts and numerous initiatives aimed at amplifying financial literacy. These efforts dovetail seamlessly with the regional goal of fostering financial integration, predicting Southeast Asia’s digital payments market to soar beyond $287 billion this year.
As they navigate more competitive waters, cross-border businesses are on the lookout for an all-encompassing platform catering to payment and financial services. Insights from the Deloitte-WorldFirst report delineate a clear trend: more micro-MNCs are expanding their ventures across multiple e-commerce marketplaces and establishing local operations in foreign markets. This shift necessitates integrated payment and financial services providers who can offer a seamless one-stop solution.
Responding astutely, firms like WorldFirst have evolved into comprehensive platforms providing not just payment solutions but also trade financing and a suite of other financial services. They have harmonized upstream and downstream supply chain services, including logistics, taxation, and advertising, to seamlessly support diverse business scenarios.
“WorldFirst takes immense pride in partnering with Deloitte to dissect the opportunities and challenges that today’s micro-MNCs face. This report aims to empower SMEs across the APAC region to unlock the substantial potential of cross-border digital trade,” states Clara Shi, CEO of WorldFirst.
The report’s global findings spell out a fascinating future: Big data analytics, commanding 75%, is touted as the most prominent digital technology application among micro-MNCs, followed by AI at 47%. These technologies are pivotal for business optimization and enhancing customer experience. Evolving applications in payment and settlement (20%) and risk management (18%) underscore the premium placed on security and stability.
The surge in digital trade within APAC has been remarkable, with an annual growth rate of 10.3% from 2017 to 2022 in digitally deliverable services exports, outpacing the global average. Leading the pack are China, Japan, Singapore, and Australia, while the EU and North America remain prominent external trading partners.
In assessing the digital trade terrain, the Deloitte-WorldFirst report identifies:
- High Potential Markets: Indonesia, Malaysia, Vietnam, Thailand, and the Philippines
- Mature Markets: Singapore, Japan, and South Korea
- Early-Stage Markets: Cambodia, Myanmar, and Laos
- Budding Market: Brunei
With survey insights from approximately 300 cross-border SMEs, predominantly from East and Southeast Asia, the report champions the innovative spirit of digital trade enterprises. Cheng Zhong, Managing Partner of Technology, Media and Telecommunications Industry at Deloitte China, articulates, “Digital trade enterprises are leveraging cutting-edge technologies like big data analytics, AI, IoT, and cloud computing to innovate business models and value chains, enriching the global marketplace.” Echoing this, Lydia Chen, Research Partner at Deloitte China, adds, “The prevailing trend sees SMEs pivoting toward cross-border e-commerce, harnessing international service ecosystems and digital technologies provided by platform enterprises.”
The report seems overly optimistic about digital trade growth in APAC. With geopolitical tensions rising, isn’t it risky to heavily invest in cross-border e-commerce?
Investing in digital trade is a calculated risk. The potential rewards far outweigh the risks if companies stay adaptive to changing political climates.
True, but what about the smaller businesses that don’t have the resources to quickly adapt to such changes? They might suffer the most.
Smaller businesses need supportive policies and innovative financial solutions to thrive in this evolving market. It’s about creating an ecosystem where they can succeed.
Branding investment makes sense, but does it really have an impact on long-term growth? Or is it just a way to burn money?
Branding is crucial for distinguishing oneself in a crowded market, especially in digital trade. It’s not just about spending money – it’s an investment in market position and customer loyalty.
I see your point. But isn’t there a risk of overspending on branding instead of focusing on core business improvements?
Branding combined with excellent customer service and product quality can create a loyal customer base that drives long-term growth. It’s all about balance.
Thailand’s digital growth is impressive, but can it be sustained with the current infrastructural support?
Thailand has been proactive in investing in infrastructure like 5G and AI. If the government continues on this path, there’s no reason why the growth can’t be sustained.
Fair point. Consistent policy support will be key to maintaining momentum though, wouldn’t you agree?
Isn’t a 10% annual growth rate for Thailand’s e-commerce sector overly ambitious? Sounds too good to be true.
It might seem ambitious, but with the increasing internet penetration and mobile wallet usage, it’s definitely achievable. The key will be continuous innovation.
Hopefully, other Southeast Asian countries can replicate Thailand’s success.
Financial literacy is often overlooked, but it’s crucial for the success of digital finance initiatives in APAC. Glad to see Thailand focusing on it.
Are traditional banks at risk of becoming obsolete with the rise of comprehensive platforms like WorldFirst?
Traditional banks need to adapt and offer more digital solutions. Otherwise, they risk losing relevance in this fast-evolving landscape.
I agree! Digital transformation is crucial for their survival, but some banks are slow to change.
It’s fascinating how AI is revolutionizing cross-border trade. But are there adequate safeguards against misuse?
AI can be both a boon and a bane. Companies and governments need to create robust frameworks to ensure ethical usage and prevent exploitation.
Absolutely. Proper regulation is key to ensuring AI benefits everyone and doesn’t become a tool for harm.
Big data analytics seems to be the most prominent digital technology application among micro-MNCs. But how do these small companies manage data privacy concerns?
They need to implement strict data governance policies and comply with international standards like GDPR. It’s a challenge but necessary for trust.
With the increasing integration of digital payment networks in APAC, how prepared are these systems to handle cyber threats?
Good question. Cybersecurity should be a top priority. Continuous updates and adopting the latest security protocols are essential to safeguard these systems.
The digital potential in early-stage markets like Cambodia and Laos is exciting. However, can these countries leapfrog technological challenges?
Absolutely, they can leapfrog with the right investments and international partnerships. Their smaller size can sometimes mean quicker implementations and adaptability.
How can mature markets like Singapore and Japan maintain their edge given the rapid evolution in high potential markets?
Innovation is key. They need to continue investing in cutting-edge technologies and fostering an environment that encourages startups and new business models.
Does the focus on digital trade mean traditional trade methods will become obsolete, or is there still a place for them?
Given the impressive stats for cross-border e-commerce, doesn’t this expose smaller economies to financial risks if global trade dynamics shift?
Innovative platforms like WorldFirst are great, but are they affordable for small businesses that are just starting off?