Small and Medium-Sized Enterprises in Asian Developing Countries: New Operating Conditions in Foreign Markets

Abstract

Small and medium-sized enterprises (SMEs) in Asian developing countries represent one of the most dynamic sectors of their economies, housing the majority of companies and employing more than half of the workforce. However, the ongoing production and trade concentration are gradually diminishing their role as independent economic entities. One of the key challenges facing SMEs is expanding their participation in international economic relations, particularly in foreign trade, which enables them to enhance operational efficiency and profitability. Nevertheless, on this path, they encounter intense competition from large international businesses. A promising strategy to overcome this issue is to increasing their engagement in global and regional value chains, which have significantly strengthened. This process is supported by economically developed Asian countries, which are transitioning in their economic activities from low-skilled to high-skilled labour, consequently leading to the relocation of some SMEs utilizing low-skilled labour to developing Asian countries. Regional trade agreements, most of which include a specific clause on developing SME potential, provide significant government support for enterprises’ entry into the regional and international market.