Bangkok--9 Aug--RADAR GLOBAL
Radar Global Launches Greenhouse250: a Business Confidence Index amongst MSMEs in Emerging Markets
Hong Kong-based market research agency, Radar Global, has launched a new quarterly sentiment index of business confidence, economic outlook and bank reputations amongst micro, small and medium enterprises (MSMEs) in seven emerging markets: China, Egypt, India, Malaysia, Philippines, Thailand and UAE.
The research is a first of its kind across multiple emerging markets. The survey findings are based on 4,600 interviews with finance managers and other business leaders of companies less than 250 employees during the first two quarters of 2012 and represents a good mix of industries and company sizes.
Radar Global co-founder and director, Grant Beuzeval, says that although momentum appears to be improving amongst government bodies and financial institutions to support, nurture and sustain MSMEs, these measures are being implemented too slowly for the likes of the business owners.
“MSME’s are the lifeblood of the local and global economy - they’re hotbeds of innovation, competition, growth and risk-taking but they end up taking all the risks by themselves. Radar Global believes it’s important to measure and monitor the business confidence of MSME’s and so created the Greenhouse250 Index, which we hope will be synonymous with business confidence in emerging markets.”
“We hope to help MSME’s share and project their opinions, fears and ambitions towards the institutions and administrations that they so desperately need for support — because the entire society will prosper if they can grow and prevail.”
The quarter two results have revealed a slight increase in the business confidence index (BCI) in Philippines, UAE and Egypt and a slight decline of BCI in India, Malaysia, China and Thailand
Despite the small decline of BCI in four countries, the “Net Outlook” is still very positive in all countries. Net Outlook is calculated as the percentage of positive response minus the percentage of negative responses.
Despite a slight decline in overall business confidence levels, most respondents still believe their country’s economy is improving. Philippines respondents expressed the highest confidence with 31% expecting a significant improvement and only 2% expecting any kind of deterioration.
The BCI is a composite index of nine separate confidence and outlook measures, namely - prospects for the domestic economy, the respondents own industry, the respondents own company, capital expenditure, hiring, the regulatory environment, seeking of finance, credit availability, sales revenue and appetite for launching new products and services.
Positive news for national employment figures is that 47% of surveyed MSMEs are expecting their work forces to expand over the coming 12 months with India leading the way at 63%. Only 6% are expecting workforce shrinkage.
In terms of the regulatory environment, 28% of respondents across all countries thought that things would become more restrictive compared to 24% who thought it may become less restrictive. Respondents in China, Philippines, Thailand and UAE thought the regulatory environment would become more restrictive than less restrictive while reverse was true in Egypt, India and Malaysia.
Corruption are bureaucracy are regularly cited amongst the top three barriers to doing business, except in UAE where the high cost of labour and availability of competitively priced credit cause problems while in Egypt (69%) and Thailand (68%) political instability is considered one of the top three barriers.
Across all countries, micro (31%) and small (25%) sized businesses are still finding competitively priced credit hard to find, compared to medium businesses (19%)
Local banks enjoy a small advantage over international banks in terms of general reputation with 14% of respondents reporting a negative impression versus 19% for international banks. At each the end of the spectrum, 27% of Chinese respondents had a negative view of their local banks while only 95% of Filipino respondents viewed their local banks positively.
In aggregate across all countries, both local and international banks suffered slight decrease in a positive reputation from quarter one to quarter two.
According to Beuzeval the survey results show an overall dampening of optimism and confidence despite the general sentiment remaining very positive.
“MSME’s are excellent predictors of economic outlook because they don’t usually have the resources to weather prolonged hard times and are therefore much shier and sensitive about things like cashflow, hiring, launching new products/services and capital expenditure”, comments Beuzeval.
“Overall though, there doesn’t seem to be any immediate or short term concern amongst MSME’s in these seven countries but the usual long-term growth concerns revolving around regulation, credit and financing remain.”
Beuzeval says that Radar Global plans to add additional emerging markets to the Greenhouse250 in coming months.
THAILAND HIGHLIGHTS
- In Thailand, while a number of metrics have declined, the general sentiment is still very positive and optimistic
- The BCI for Thailand has dipped from 62.9 in Q1 to 61.7 in Q2
- 33% of respondents were positive about the country’s economy over the next 6 months, down from 40% in Q1
- 87% were positive about their own company’s financial prospects and 78% were positive about their own industry’s prospects
- The most pessimistic for continued improvement in the country’s economy is the Manufacturing sector (26%) while the Finance sector (8%) was least pessimistic.
- 93% rated the availability of credit for their company has easily or somewhat available — the highest amounts all surveyed countries - and 50% expect to seek financing in the coming 12 months.
- 43% expect the regulatory environment to become more restrictive — the highest of all seven countries surveyed
- 46% of companies expect their work force (head count) to increase over the coming 12, 46% expect it to remain about the same and only 8% expect some shrinkage
- 32% of companies with 1-10 employees expect to increase their workforce compared to 55% of companies with 51-250 employees.
- 89% of respondents thought that local banks had a positive reputation while only 76% thought that international banks had a positive reputation
- When asked what the three main barriers to local business were — 68% said Political Instability, 57% said Corruption and 36% said the High Cost of Labour, followed closely by Red Tape with 32%
Grant Beuzeval is the Co-Founder and Director of Radar Global and can be contacted at —
Email:
[email protected]
Telephone: +852 8124 5860
Address — 803 Seaview Commercial Building, 21 Connaught Road West, Sheung Wan, Hong Kong
Website — www.radar-global.com
Radar Global is a full member of ESOMAR — the European Society for Opinion Marketing and Research