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SMEs Leverage
the Internet
By Michael Alan Hamlin
April 5, 2004
A survey taken during last October's Manila F.A.M.E.
International exhibition suggests that small- and medium-size enterprises
are embracing technology and the Internet to promote and sell export
products such as furniture, handicrafts, and other home and seasonal
décor. F.A.M.E. is organized by the Center for International
Trade Expositions and Missions (CITEM), and takes place twice a
year.
Last October's exhibition featured 500 exhibitors who showcased
their wares to almost 3,500 local and foreign buyers over four days.
The show generated US$72.32 million in new contracts according to
exhibitors who reported the financial results of their participation
to CITEM. This year's first F.A.M.E. takes place April 19-22, and
with the global economy looking up the organizers are optimistic
that the exhibition will do even better than October's.
Forty-three of the 500 exhibitors in October's F.A.M.E., or about
nine percent of the total exhibitors, participated in a survey conducted
by DigitalFilipino.com dubbed "ICT and Internet Usage in the
Product Export Sector." Exporters of home, décor, and
house wares accounted for about 60 percent of respondents, and another
30 percent specialized in arts and crafts. Other categories included
Christmas décor, furniture, fashion accessories, and other
products. Over 60 percent are located in the National Capital Region.
About 64 percent of respondents are micro and small firms with below
P1.5 million to P15 million in assets. Twenty-nine percent have
between P15 and P60 million in assets. Just eight percent has assets
higher than P60 million. Accordingly, 79 percent of respondents
employ 30 or less people, and 33 percent employ 10 or less. The
total sample base employs less than 1,600 people, so these are really
small companies, especially for the manufacturing export sector.
Interestingly, more respondents, 37 percent, export to Europe than
any other country or region. Twenty-four percent export to the U.S.,
and 21 percent to Asia. About 50 percent expected revenues in 2003
of less than P5 million. Forty-four percent expected revenues to
come in between P5 and 15 million. Only six percent expected to
achieve revenues greater than P15 million.
The principal business concerns of respondents were competition
(66%) and the cost of raw materials (22%). When asked how investment
in ICT helped address these concerns, 35 percent said technological
superiority was the principal incentive. To give you an idea of
what the notion of technological superiority means, about half of
respondent companies have a laptop computer, and half again have
more than one. Thirty-seven percent plan to buy one this year, and
28% have installed local area networks. All respondents have at
least one desktop.
A more impressive statistic is the number of companies that have
Internet access: 98 percent. And, almost 80 percent have had Internet
access for more than two years. Twenty-eight percent have leveraged
the Internet for four or more years, and 40 percent have their own
website. Eighty percent of those sites were created in the last
three years. Twenty-eight percent of respondents use their websites
to promote new products, and 23 percent to communicate with potential
clients. Another 20 percent said they use their websites to disseminate
information to current partners.
When asked how their websites help boost organizational productivity
and profitability, 82 percent of respondents with websites said
clients are properly informed of new products, which makes a great
deal of sense, of course. If clients don't know about the products,
they can't be expected to buy them. Seventy-six percent of respondents
indicated that online product catalogues help generate leads. And
71 percent said their sites provide advertising visibility and enable
quick feedback from clients.
Another encouraging response was the 59 percent who said that less
paper is a major benefit, and about 50 percent said online leads
become paying clients. Ninety percent of respondents with websites
paid less than P50,000 to develop them, and 36 percent said they
update their sites at least once a month. About 65 percent have
their sites hosted in the Philippines, and 35 percent overseas,
presumably to hasten response times.
If these results hold - and they are from a representative sample
of F.A.M.E. exhibitors - across the SME sector, they suggest an
encouraging trend. First, SMEs appear willing to invest in technology
and increasingly in the Internet; second, it appears to be paying
off; and three, it's creating new opportunities that these companies
wouldn't have otherwise. While the results in many respects are
humble, the benefits shouldn't be discounted either.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is currently
at work on High Visibility: The Making and Marketing of Asian Professionals
into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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