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2013/SMEWG37/023 Agenda Item: 12.2

SMEs Participation in the Global Value Chains All-In-One Electronic Supply Chain

Purpose: Information Submitted by: ABAC

37th Small and Medium Enterprises Working Group Meeting Bali, Indonesia

4-5 September 2013

SMEs Participation in the Global Value Chains

All-in-One Electronic Supply Chain

37th Meeting of the APEC SMEWG

Nusa Dua – Bali, Indonesia4 September 2013

www.abaconline.org

APEC Business Advisory Council

Key Areas of Recommendations

2

1. Promote Entrepreneurship & Innovation

2. Access to International Markets

3. Access to Finance

1

2

3

In the Letter of 18 July 2013 from ABAC Chair 2013 to Ministers

3 Most Important Areas for the Growth of SMEs

Access to International Market & FinanceAll-in-One e-Commerce Platforms for CBT

Asia

Americas

Europe

Australia

Africa

• Store Setup• Product Display• O’seas Marketing• Enquiries

• Insurance• Value-Added Services• Integrated Service• Disputes

• Deliveries• Custom• Tax Returns

• Micro Loan• Creditability

• Goods• Online Payment

Chinae-Commerce as a Catalyst for Growth

Single Day Online Sales up to $4 billion

•5-6% of retail sales•60% YoY increase•90% on Marketplace Platforms•CAGR 120% since 2003

Source: McKinsey Global Institute, AliResearch, China Ministry of Commerce

Online Merchants

9 million +in 2012

Online Transactions

$190-$210 billionIn 2012

Can reach $420 – $650

billion in 2020

Job Opportunities Created

Micro-Loans to Online SMMEs

• E-Commerce 1.8 million +• Related Industries 16.5

million +

Q1 2013 (in 1 quarter)• 1 million approved loans• 250,000+ SMMEs• ¥11 billion• Ave ~¥11,000 / loan

No of SMMEs58 million +

in 2012

Shortened Supply Chain

Eliminate Middlemen

Factory Export Organizations

Import Organizations Wholesalers Retailers Consumers

Factory Consumers

All-in-One Platform

Margin Transaction Cost Business Cycle Global Market

Traditional

Safe & Transparent Direct to Customers Analytics

A Typical Example of Cross-Border Trade

Increased Margin

Logistics10%

Net Profit54%

Manufacturing Cost12%

Online Payment4%

Web Store20%

Net Profit5%

Manufacturing Cost8%

Overseas Retail25%

Overseas Channel50%

Domestic Channel12%

Increasing Marginfrom 5% to 50%

Traditional e-Commerce

Key Benefits for Buyers & SellersSe

llers

Buye

rs

Displaying products online

Access to global markets

Payment collection & logistics

Trade Financing

Anytimeaccess to products

Minimize trading risk

Disinter-mediate middlemen

Find millions of products

Examples of E-Commerce UsersSellers Buyers

SME suppliers

Traditional wholesaler exporters

Trading companies

Web merchant entrepreneurs

SME retailers

Wholesalers & distributors

Small business for own use

Part/time business owners Young

entrepreneurs

Success Stories• SME manufacturer in Shenzhen, China

• Specialized in high-end wireless headphones

• Since using e-commerce in 2007:

- No prior export or e-commerce experience

- Introduced to e-commerce via a training seminar and learned to setup an e-shop using marketplace’s built-in payment and logistics options

- Today, selling successfully in USA and Europe

- Annual sales grew from US$300K to US$35M

- Employees grew from 18 to 300 + people

- Today, operate 10,000sf R&D + manufacturing center

Success Stories• First online purchase from China at age of 18

• Initial sourcing budget: US$150

• Selling mobile cases to friends and family

• Results after 5 years:

• E-shop operation selling over 800 products related to phone accessories, audio/visual cables and golf equipment

• 5,000 Square feet warehouse

• More than 300 sales orders each day

Robert Shaw, United Kingdom

Entrepreneur with 5 years experience running own e-shop

“To think I started selling cases to friends and family now to selling on a global basis is massive. I’m now 23 and life has never been so good! Since starting my business I have never looked back and it has been a fantastic experience!”

Access to FinanceExamples of Micro-Financing for SMMEs

Micro-Loan

• Goods• Online Payment

• Micro Loan• Creditability

• Store Setup• Product Display• O’seas Marketing• Enquiries

• Deliveries• Custom• Tax Returns

• Insurance• Value-Added• Integrated service• Disputes

Recommendations

1. Establish SME Summits in each local Economy Continue to support more SME Summits

2. Leverage ICT & existing e-Commerce Platforms Help Access to International Market & Financing

3. Implement Policies & Standards to facilitate Cross-Border e-Commerce Public-Private cooperation Green Channel

1

2

3

Create Opportunities by

Learning & Connecting

2008 China APEC SME Summit2009 APEC SME Summit

2010 APEC SME Summit

2011 APEC SME Summit

ABAC 2013 All-in-One Electronic Supply Chain

Diane Wang

ABAC MemberVice Chairman of APEC Women Forum

Founder & CEO, DHgate