Small business key to innovative growth

It is our firm belief that the APEC innovation system cannot function without SMMEs, and our collective economic growth and competitiveness depend largely on their capacity to innovate.

Starting a business means “betting against the odds,” says Anthony Koh, a successful entrepreneur from Singapore.

Finance is often difficult to find and so too good staff, mainly because it is hard to afford, at first, to pay the highest wages. Potential customers may not trust start-ups initially, because they are new to the market.

“You have to build trust and prove yourself. It takes a lot of determination and hard work and you need to really believe in your business and your idea,” says Mr Koh, who runs an innovative online payment company.

As a company grows, and expands into regional markets, the challenges can be even more daunting. Information on everything from legal, financial and government regulations to market knowledge and local culture can sometimes be unclear, hard to find or unreliable.

“Sometimes it’s hard to know which doors to knock on. Who will give me the right information? It’s hard, unless you are able to engage the right consultant, but that will cost you some money,” Mr Koh says.

Mr Koh was among entrepreneurs, business leaders, financiers and government officials who took part in APEC initiatives this year, aimed at tackling these and other challenges facing small and medium and micro-sized enterprises (SMMEs). Assisting SMMEs – including by removing trade barriers and strengthening their ability to export – has long been a key APEC agenda. And boosting SMMEs has also become a part of APEC’s strategy to foster innovation, both crucial to the future of the region’s prosperity.

Some of APEC’s initiatives, including conferences, workshops and capacity-building activities, target established SMMEs, which employ more than half of the Asia-Pacific’s workforce.^[1] Others are designed to help start-ups and new entrepreneurs, whose innovative and forward-thinking ideas can also contribute to economic growth.

Start-ups

The APEC Start-up Accelerator (ASA) Initiative, for example, aims to connect newcomers with “mentors” such as well-known entrepreneurs and successful businesses around the region so that they can exchange information, advice and expertise on scaling up and seizing market opportunities. APEC economies are set to work together to host events to strengthen this network, which will also link new businesses to angel or venture capital funds, increasing their access to finance.

“Under the current economic climate, SMMEs face difficulties commercializing new products, systems, and services, as well as obtaining the necessary finance to effectively scale up and grow their businesses,” says Johnny Yun-Lung Yeh, from Chinese Taipei, who helped establish the initiative.

“The ASA is designed to provide entrepreneurs and start-ups with better access to mentorships and funding through events and communities, and to encourage exchange programs to help start-ups expand into partnering APEC economies,” says Mr Yeh, Director General of SME Administration at Chinese Taipei’s Ministry of Economic Affairs.

Leadership and Innovation

APEC Leaders, meeting in September in Vladivostok, Russia, noted the importance of assisting SMMEs at an early stage, through this initiative and others. SMMEs are a significant driver of development and innovation in the Asia-Pacific. These businesses are therefore important to “improve the quality of economic integration and competitiveness of our economies,” Leaders said in their Declaration.

Throughout 2012, APEC, chaired by Russia, worked under the theme “Integrate to Grow, Innovate to Prosper.” Innovation is broadly defined as the process of introducing new ideas, methods or products to the world. Fostering innovation, creativity and intellectual capital can help drive up the value of exports and increase productivity and competitiveness, all of which create jobs and build greater economic prosperity.

To this end, APEC economies in 2012 took important steps towards the development of effective, non-discriminatory and market-driven innovation policies, Leaders said in their declaration. To support its members, APEC’s work included forming a Policy Partnership on Science, Technology and Innovation that is focused on intensifying cooperation between governments, businesses and academia to address challenges to fostering innovative growth, and enhance economies’ capacity to develop such policies.

Leaders committed to strengthen such cooperation and networking, going forward. Chief Science Advisers from APEC economies, for example, have agreed to meet in 2013 to reinforce senior science relations across the Asia-Pacific. And in higher education, for instance, stronger cooperation includes making it easier and cheaper for students and researchers to move to overseas institutions and for universities to offer their services in other economies. Leaders noted that such increased movement can build people-to-people exchanges and promote economic development through knowledge and skills transfer.

SMMEs

As for SMMEs, APEC is pressing ahead with tackling their biggest hurdles – including “lack of access to financing, lack of capacity to internationalize and difficulty in identifying opportunities overseas and need for open and transparent business environments.” Given the “current economic climate,” addressing these challenges is critical, says Robert Lai, Chair of APEC’s Small and Medium Enterprise Working Group.

“They are of vital importance for generating new knowledge, products and services. It is our firm belief that the APEC innovation system cannot function without SMMEs, and our collective economic growth and competitiveness depend largely on their capacity to innovate,” says Dr Lai.

“Such efforts will extensively facilitate trade and investment in the Asia-Pacific region.”

Networking

One such initiative, also noted by Leaders in their declaration, helps young entrepreneurs, including new and women entrepreneurs, network around the region. At a first meeting of the APEC Young Entrepreneurs Network, in St Petersburg, Russia in August, successful entrepreneurs from different economies swapped experiences and knowledge. Information sessions were also held with relevant government officials, including on how to stimulate innovative start-ups, promote education in economies about entrepreneurship and increase access to finance. Regular meetings of this network are now set to be held, following on from a similar summit in Kuala Lumpur, Malaysia in 2011.

For his part, Mr Koh agrees that networking is an important tool for entrepreneurs to build their business.

And growing new businesses bring prosperity. “It’s a sector that cannot be ignored. If more start-ups and entrepreneurs are successful that means they generate more jobs and that boosts the economy,” Mr Koh added.

[1] APEC Policy Support Unit (2010) SME Market Access and Internationalization: Medium-term KPIs for the SMEWG Strategic Plan