In a world of digitised trade

by WIEF Foundation

The business world has evolved to digital platforms with more services made available online, such as ride-hailing, online shopping, e-payment and more. Consumers and corporations are shifting to such platforms and small and medium enterprises (SMEs) must adapt similarly and maximise the advantages of digital trading to stay relevant.

Overcoming challenges and embracing technology
According to Dr Eddy Lee, who is managing partner of Coffee Venture, Singapore, a common problem for SMEs was the challenge of scaling their business. To overcome this, SMEs should embrace technology to build a marketplace with a larger reach. SMEs should also work together on e-commerce platforms to meet different types of consumer demand.

The advantage of embracing technology was clear to see as moderator Elias Schulze, Co-founder and managing director of Kana Television, Ethiopia, pointed out: About two-thirds of SMEs differentiate themselves from competition by using digital integration (according to research by Vodafone). Similarly, Lloyd’s Bank, UK, found that SMEs that were connected digitally grew at a much faster rate.

‘The cost of technology is dropping; the access to technology has increased exponentially; the opportunity to communicate your message, your idea, your strategy has been greatly facilitated. This is the time to get it done,’

However, there was a flip side to the coin. A study conducted by PwC in the UK found that nearly a quarter of SMEs had trouble with digital integration and dealing with digital logistics platforms. How can SMEs overcome these challenges?
Dr Lee argued that entrepreneurs should spend time to understand social and digital marketing and adopt digital trade to enhance the scalability of their business by studying trends and consumer behavior. ‘Modern marketing methods require you to understand how to use Survey Monkey; Mail Chimp to send out 2,000 emails – Which is the limit of Gmail sending per day without jamming up; search engine optimization; Facebook ads and different kinds of advertising methods,’ he said. Personalised URLs or links with content would also help sites become more visible to search engines such as Google.

Philip Glickman, Regional Head of Commercial Payments, MasterCard Asia Pacific, said that SMEs currently have access to technologies that used to involve huge upfront costs. Today costs are usually calculated on individual use of the technology has increased exponentially; the opportunity to communicate your message, your idea, your strategy has been greatly facilitated. This is the time to get it done,’ Glickman added.

‘The cost of technology is dropping; the access to technology has increased exponentially; the opportunity to communicate your message, your idea, your strategy has been greatly facilitated. This is the time to get it done,’ he said.

Technology must meet local needs
Grab – a small company four years ago focuses on using technology to create a new marketplace 
for transport and logistics. Today, it is a multinational company spanning Southeast Asia. Ridzki Kramadibrata, managing director of Grab Indonesia, attributed the accelerated growth to an in-depth understanding of the local market and the relevant use of technology.

He said that Grab had to types of customers: drivers (to whom Grab provides the ride-hailing application) and the customers (who request rides). Ridzki said that technology was the enabler but having a comprehensive understanding of customer’s needs helped the company develop and deliver a service that connected to the market.

Arguing that SMEs should seize the opportunity to scale up and expand with technology, Ridzki stressed the important of understanding the market – for example, cashless payments had yet to gain traction in Indonesia, so Grab used technology to incorporate cash payment into its ride-hailing service.

Ridzki pointed out the happy coincidence where Grab also provided SMEs with an alternative logistics solution – in terms of transporting staff and delivering goods – that did not invoice any upfront investment. In this way Grab has become an enabler for SMEs.

Regulate or not to regulate
As much as the innovative use of technology helps businesses advance and scale up, there is also the perennial question of regulation. Glickman said while regulation varied according to a country’s needs, it tended to be more transparent and beneficial when governments had a greater understanding of specific industry needs.

Ridzki noted that technology advanced so quickly that regulation was still trying to catch up and some government have been caught off guard with regulation sometimes not having the desired effect. He believed that governments should conduct meaningful discussions with all relevant parties to understand the industry and recommended that regulation be based on such feedback.

Dr Lee said the Singapore Government was very proactive, allowing ‘grey areas’ with regard to sectors of national interest such as financial technology. ‘The Monetary Authority of Singapore encourages entrepreneurs to try out financial technologies such as crypto currency and new means of transaction between business and individuals without asking for government permission because they don’t have the bandwidth to answer every single question. Instead, if you grow big enough, you’ll hear from them.’

Schulze asked if regulators and governments should step in during the infancy of the industry or at the tail-end when the industry was at its maturity – or should regulators let the industry take care of itself? Dr Lee responded that this was very difficult to determine as it depended on the product, service or industry involved. He said that regulators should step in to educate and equip the general population with the knowledge and information and then allow them to decide if the industry required regulation.


Based on a session from the 12th WIEF in Jakarta, 2016.

For more on disruptive changes in the economy, join the 13th WIEF discussion on disruptive change with Apple Co-founder Steve Wozniak this 21-23 November 2017 in Sarawak, Kuching. Click here for more information.

4 Oct 2017
Last modified: 10 Oct 2017
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