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Asean SMEs urged to dabble in niche industries
Publication Date : 26-08-2013
Small and medium enterprises in the Asean region can start with their niche industries to gauge where they can cross borders.
Reginald Alberto Nolido, partner at Corporate Counsels Philippines, and one of the panelists at the Fifth Asean-China Young Entrepreneurs Forum, held at the International Convention Centre (ICC), yesterday said that because most of the businesses in the region are made up of SMEs, they tend to fall into niche industries.
"Being an SME, you don't really have the width or flexibility to get into different kinds of activities. Being the case, you have to concentrate on what you are an expert in," he said. He said that this does not mean that SMEs should limit themselves to just that. He added that once companies expand their businesses, they will realise that there are other opportunities out there.
One example that Nolido gave was with a company based in the Philippines which started a cleaning company. They offered their services to different companies, but realised that there is a lot of competition in just cleaning, so they narrowed down their services to be industrial cleaners, targeting corporations and offices.
Nolido said that they realised that they could do more because the company also serviced restaurants, so they expanded their operations to train waiters, maitre d's and butlers. "Now they are getting into that business, all because their outlook grew from their business, so yes, you start as a niche but that doesn't mean you have to stay there," he said.
Nolido added that although Asean is moving towards the Asean Economic Community (AEC) in 2015, and the forum aims to encourage business between China and the region, SMEs still remain in their domestic market.
"There is a fear that if you go out, you're just going to be eaten up because there is a larger challenge, and that challenge is that they are going into an area where they don't know anyone, or how business is done," he said, stating that this is still the unfortunate situation that many countries in the Asean region are in.
"The rules are dictated not so much by laws, but who you know and how things are done, and how to go around things, which can be a problem that is holding some entrepreneurs back," he said.
One solution that Nolido said is for SMEs to identify "good partners" in other countries because it will help guide them within the foreign business environment. He added that in his profession as a lawyer, he has dealt with local companies in the Philippines partnering with other companies in the region and getting into joint-ventures.
He said that foreign partners have a better understanding of business in their own country, and by partnering both SMEs are able to grow together. "I think it is crucial for the success of SMEs under this new regime of the AEC to be more open to partnering with entrepreneurs from other countries, the reason being that if you want to be a success somewhere you have to know how things are done there," he said.
Asked about how niche SMEs can conduct business in China, without having move out of their own domestic market, Nolido said that one opportunity could be to open up their business to being sub-contractors. In the services sector made up of professionals Nolido gave the example where companies could offer services abroad and do the business locally to cut client's operation costs.
"The same with China, China is a booming economy, and it is so big now that one of the problems is their cost of labour is going up," he said, adding that SMEs can take advantage of the situation to offer services at a lower cost.