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Integrating GMS SMEs into Global and Regional Value Chains (Tourism Sector). Naylin Oo Trade and Investment Division. Outline. UN ESCAP in a Nutshell. Global and Regional Value Chains. Opportunities and Challenges for SMEs in Value Chains.

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naylin oo trade and investment division

Integrating GMS SMEs into Global and Regional Value Chains

(Tourism Sector)

Naylin Oo

Trade and Investment Division

outline
Outline

UN ESCAP in a Nutshell

Global and Regional Value Chains

Opportunities and Challenges for SMEs in Value Chains

Role of SMEs in Global/ Regional Tourism Value Chains

Supporting GMS SMEs through

Sub-Regional Cooperation

in a nutshell
in a Nutshell
  • One of the five United Nations Regional Commissions under ECOSOC
  • 53member states and 9 associate member states
  • Promoting inclusive and sustainable economic and social development
  • Trade and Investment:
      • Trade Policy and Trade Facilitation
      • Business for Development: Private Sector contribution to inclusive and sustainable development
current focus
Current Focus
  • Integrating SMEs into Global and Regional Value Chains
      • Bottom-up approach to identify needed changes in business environment and trade facilitation relating to selected supply-chains (Greater Mekong Sub-region)
  • Investors for Development (I4D)
      • Promoting Global Compact principles and Corporate Social Responsibility (CSR)
  • Public-private sector dialogues
      • Asia-Pacific Business Forum (APBF)
      • Business Advisory Council (BAC)
slide6

Why SMEs?

In the era of globalization…

Can SMEs compete in the international market?

Can SMEs learn to be competitive?

Will SMEs benefit from the globalization?

Can SMEs survive in the global competition?

What can we do to bring the benefits of globalization to the poor?

  • Tourism industry is largely dominated by SMEs
  • > 95 per cent of all enterprises
the idea is
The Idea is…
  • Selling products and services directly to the international consumers with “Brand Presence” & “Pricing Power”
    • Have information related to market/process/product
    • Have capabilities over the full Value Chain (design, production, marketing, distribution, etc.)
    • Respond effectively to the changing market conditions
  • Alternate option: Reaching the international consumer through global and regional value chains

Very difficult for SMEs in developing countries

slide8

Emergence of VCs: Drivers

  • Multilateral and regional free trade agreements
  • Policy liberalization
      • Trade, investment, capital & finance, HR
  • Technological innovation
      • Transportation and ICT
  • New management strategies
      • JIT, ERP, supply chain management
global value chains gvcs
Global Value Chains (GVCs)
  • Full range of value-added business activities involved in design, inputs, production, marketing, distribution, finance, HR and after services across borders
  • Firms can focus on one or more activities in a VC
  • Typically a lead firm regulates a GVC with brands, technologies, channels & distributions, expertise and/or goodwill

2nd TIER

SUPPLIER

1st TIER

SUPPLIER

END

CUSTOMER

LEAD FIRM

DISTRIBUTOR

Movement of Goods and Services across Borders

tourism value chain
Tourism Value Chain
  • Tourism principal – Supplier of tourism products and services
  • Intermediary – In charge of bundling, packaging and promoting the products and services
  • Consumer – Tourist and visitor

Tourism

Principal

Intermediary

Consumer

(Tourist)

Simple Tourism Value Chain

slide11

Traditional Tourism VC

Consumer

National Tourism Organization

Travel Agent

Regional Tourism Org.

Tour Operator

GDS/CRS

Local DMO

Group/ Consortium CRS

Accommodation at Destination

Air Travel

Car Rental

Rail/ Bus

slide13

Tourism and Related Sectors

  • Improve product and service standards
  • Provide an intermediate export market
  • Enhance competitiveness
  • Create demand for export products
  • Drive exports through joint branding/ marketing

Agriculture

Transportation

Tourism

Production

Accommodation

slide14

Challenges for SMEs

  • Lack of awareness,capacity and resources
      • Skilled labour
      • Capital
      • Infrastructure
      • Managerial expertise
      • Knowledge and technology
      • Contacts/networks
  • High entry barriers -- International Standards
      • Pressure to deliver specified product, required quantity and right quality at competitive price, agreed delivery times (leadtime), CSR
  • Unfavorable national business environment
      • Increased risk
slide15

Opportunities for SMEs

  • Access to international market through GVCs
  • Support from TNC (training/ investment in business process/ information sharing etc.)
  • Technology and knowledge transfer
  • Long term buyer-supplier relationship
  • Reputation and brand development
  • Opportunity to up-grade and move up to the next tier
slide16

To overcome Challenges

  • Supply side capacity building: Training/ Counseling and advice/ R& D/ Micro Financing/ Corporate governance (incl. CSR)/ Management techniques
  • Enabling business environment and policies: Laws & regulations and their enforcement/ ICT and logistic infrastructure/ Government & Institutional support
  • Develop opportunities through cooperation (i.e. SME clusters): Economies of scale/ joint action/ information sharing/ enhancing attractiveness to global buyers by reducing transaction costs
  • Promote GVC mind-set
slide17

SMEs’ Corporate Strategies

  • Reach the global market through existing GVCs that are most likely dominated by principals
  • Enter into lower tiers with a low-value role in GVCs - intermediaries
  • Move up GVCs to high-value added activities over time
  • Find adequate financing for the investments and accessing quality workforce
  • Collaborate with other SME players vertically and horizontally in a GVC
      • Value co-creation, rules of interaction
      • Synergetic thinking
      • Performance monitoring
slide18

Value Chains Management

  • To systematically reduce any sources of uncertainty in supply and demand through active cooperation of the key players
  • Value chain governance
    • Legislative (setting the standards of production and delivery)
    • Judicial (monitoring conformance with the standards set)
    • Executive (helping actors in meeting the standards set)
slide19

Sub-regional Cooperation

  • Develop ‘GVC mindset’ in cross-border cooperation among GMS countries (need coordinated approach at strategic level)
  • Facilitate the development of GMS SME clusters/networks (consortia/alliances) across borders (and share information/ best practices)
  • Facilitate cross-border linkages of business institutions and services (e.g., GMS BF, BDS)
  • Strengthen cross-border (GMS/Sub-regional) trade and transport facilitation for tourism GVCs
  • Promote inclusive and sustainable tourism (e.g., accessibility, culture and heritage, environment)
gvc focused cooperation
GVC-focused Cooperation
  • “Mapping” value chains within the framework of a GMS GVC Working Group
  • Holding Sub-regional training workshops on Tourism GVC
  • Establishing GVC-related ICT training and resource centers
  • Building SME supplier clusters along the corridors
  • Building vertical linkages in Tourism GVC
  • Fostering sub-regional cooperation in standards and certification
slide21
Thank you!

Questions?

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