APEC (2014) Integrating SMEs into Global Value Chains: Policy Principles and Best Practices
This study follows a qualitative analysis that identifies the strengths, weaknesses, opportunities and threats (SWOT) for small and medium enterprises (SMEs) in the Asia-Pacific Economic Cooperation (APEC) region to participate in the value chains of five selected sectors: the agriculture, food processing, automobile, electronics, and handicraft sectors.
The agriculture global value chain is led by large wholesalers and retailers, and in certain cases, development agencies and non-profit organizations. Standards on safety, quality, size, shape and timely delivery are important and prevalent in this chain. Also, due to high perishability of agricultural products, investments are focusing on cold chain management and transportation.
The food processing global value chain is led by multinational food companies. As competition among lead firms increasingly lies in product differentiation and satisfaction of premium-paying consumers, it is moving towards consolidation. Although private food standards are growing in numbers and significance, food safety, food waste and food losses are prominent concerns.
This paper discusses five governance structures: market, modular, relational, captive, and hierarchical. Although the five structures reflect distinct strategies, in reality, value chains are more complex, and show complicated configurations with combinations of several governance structures.
The analysis shows that for SMEs in developed and newly-industrialized economies, the agriculture and electronics sectors offer the higher potential to participate in GVCs; and for SMEs in developing economies, the electronics and handicraft sectors offer the better prospects.