APAC micro-MNCs optimistic on digital trade, view technology and brand as key to success: Deloitte

• 71% of surveyed micro-MNCs are upbeat about cross-border digital trade
• 88% prioritise and are adopting big data, AI, e-payment, and other digital tech for growth

Deloitte has launched a new report that finds micro multinational companies (micro-MNCs) in Asia Pacific (APAC) are increasingly adopting digital technologies and investing more in branding as they remain optimistic about cross-border e-commerce and digital trade.

The report, titled “Going-Global: Seizing the Next Great Opportunity in Digital Trade,” conducted in collaboration with the digital payment and financial services platform WorldFirst, reveals that APAC has maintained its status as a key driver of global economic growth amidst global economic slowdowns, geopolitical tensions, and rising protectionism. Specifically, the region’s import and export trade in goods accounted for approximately 40% of global trade activities, reaching nearly US$18 trillion (RM77.6 trillion), a 30% increase from US$13.7 trillion (RM59 trillion) in 2013.

The report states that 71% of the surveyed micro-MNCs engaged in cross-border e-commerce and digital trade remain optimistic about the prospects of cross-border e-commerce over the coming year. This indicates that most companies are confident in market demand, policy environment, and technological advancements, anticipating continued market expansion with significant growth in sales and profits.

Meanwhile, 88% of the surveyed companies recognise that branding is crucial for sustaining long-term business growth. Branding not only helps businesses establish a differentiated competitive advantage in the market but also enhances customer loyalty and market share. As a result, 68% of the businesses said they will increase investment in branding.

The report also found that policy initiatives introduced in Singapore have significantly reduced the challenges both merchants and consumers face in digital transactions. Such initiatives include the enhanced QR code payment scheme SGQR+ and the launch of the world’s first cross-border linkage of real-time payment systems, connecting PayNow with Thailand’s PromptPay and Malaysia’s DuitNow. These initiatives have led to more merchants adopting digital payment methods, providing more convenience for consumers and bolstering digital trade growth.

As a mature market, Singapore’s position as a global commercial centre and international logistics hub provides a firm foundation for businesses to conduct digital trade. The country consistently ranks at the top in global business environment indices. Singapore has also actively participated in constructing the digital trade system and reducing digital trade barriers through extensive trade partnerships. Although its domestic e-commerce market is not large, its advantages in trade, transportation, and digital infrastructure endow it with a pivotal role in Southeast Asia’s digital trade.

Enterprise Singapore found that there was a 66% increase in Singaporean companies venturing into new markets for the first time in 2023, compared with 2019. This refers to companies that went overseas for the first time or those that already have overseas operations but set up shop in a new market.

Cross-border businesses look for comprehensive platform for payment and financial services

The Deloitte-WorldFirst report finds that more micro-MNCs have begun to run multiple business lines, operate on more than one e-commerce marketplace, and set up local operations in overseas markets—a shift partly due to increased competition in cross-border e-commerce. This trend has led cross-border businesses to seek integrated payment and financial services providers.

Consequently, cross-border trade payment firms, including WorldFirst, have transitioned to comprehensive platforms that offer payment, trade financing, and other financial services. They have also integrated upstream and downstream supply chain services, such as logistics, taxation, and advertising, to support various business scenarios.

Clara Shi, CEO of WorldFirst, said, “We are proud to collaborate with Deloitte to explore the opportunities and challenges confronting today’s micro-MNCs. This report’s findings are designed to better support SMEs across the APAC region in leveraging the significant potential of cross-border digital trade.”

Key global findings from Going Global: Seizing the Next Great Opportunity in Digital Trade include:

• Big data analytics will lead the application of digital technologies among micro-MNCs. Big data analytics (75%) is currently the most prominent and widely applied technology, followed by artificial intelligence (47%), as these technologies are directly related to business optimisation and the enhancement of customer experience. Meanwhile, technology application in payment and settlement (20%) and risk management (18%) demonstrates the importance enterprises place on security and stability.
• Digital trade in APAC is experiencing significant growth. From 2017 to 2022, APAC’s annual growth rate in digitally deliverable services exports was 10.3%, outpacing the global average of 7.1%. Leading export markets within the region include China, Japan, Singapore, and Australia, while the European Union (EU) and North America stand out as the region’s primary external trading partners, accounting for 27% and 20% of APAC’s export market, respectively.

The Deloitte-WorldFirst report developed a new index to assess the digital trade environment and growth prospects for each country.

• 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

The Deloitte research surveyed approximately 300 cross-border SMEs, typically with fewer than 500 employees and primarily based in East and Southeast Asia.

“Digital trade enterprises are leveraging leading-edge digital technologies such as big data analytics, AI, IoT, and cloud computing to forge innovative business models and value chains, enriching the global marketplace with a broader spectrum of goods and services,” says Cheng Zhong (pic), managing partner of Technology, Media and Telecommunications Industry, Deloitte China. “Moreover, digital platforms—represented by cross-border e-commerce—are transcending space and time, fostering seamless collaboration across the global value chain.”

Echoing this sentiment, Lydia Chen, Deloitte China Research partner, adds, “The vast majority of SMEs are making a pivotal shift into cross-border e-commerce, leveraging platform enterprises, their expansive international service ecosystems, and digital technologies.”