UPS Survey: Intra-Asia Trade Expected to Explode

ATLANTA, May 3, 2006 - Business leaders from Asia’s small-to-mid-sized enterprises say they expect growth in trade this year between Asian nations to outpace even the robust trade still growing between Asia and the West, according to a new survey from UPS.

Almost 70 percent of the survey respondents say they expect growth in intra-Asia trade volume this year. That compares to about half of the respondents who project more growth this year in trade between Asia and the United States and between Asia and Europe.

"Asia’s role in foreign trade with the United States and Europe is well documented and nothing indicates it will slow any time soon" said David Abney, president, UPS International. "However, the intra-Asia trend is certainly one that’s well worth watching and one that could present great opportunity for companies with a global presence"

The UPS Asia Business Monitor surveyed more than 1,200 executives from small-to-mid-sized businesses in 12 key markets. It focused on small-to-mid-sized firms because they form the backbone of many Asian economies.

The survey found that most Asian business leaders - 71 percent - are optimistic about the overall state of the Asian economy and expect to see continued growth over the coming year.

Obstacles for Small Businesses

Along with economic optimism, the survey also highlights challenges for small-to-mid-sized businesses in Asia. Across the region, respondents say that innovation, availability of qualified staff and access to funding and working capital are their biggest concerns. Respondents in developing markets including China, Indonesia, Thailand and the Philippines also cite legal framework, supply-chain efficiency, access to overseas markets and access to market intelligence and other business information as additional obstacles to their businesses.

Optimism in India

Business leaders in India were undeterred by challenges and show great optimism in their country’s growth prospects. A total of 43 percent of respondents there say that they believe India will be on par with China, in terms of economic growth potential, within three years. Respondents from India also are more optimistic about trade growth with the United States. A total of 76 percent of respondents there project trade with the United States will increase in the year ahead.

The China Factor

As with many U.S. businesses, China is a key market for Asian companies. Small-to-mid sized business presence in China has increased for all countries except Japan, where it has fallen significantly.

A majority of respondents also acknowledge that doing business in China is not without risk. Close to 70 percent of those surveyed say that intellectual property protection is their greatest concern when doing business in China, followed closely by transparency, government intervention and trust in business partners.

From Credit to Competitiveness … A Few Survey Highlights

The Asia Business Monitor reveals a wealth of additional highlights, including:

* Asia’s providers of credit and finance receive failing grades for their service.
* Information Technology and Telecommunications is cited as the most important industry in Asia, followed by Financial Services, Healthcare & Pharmaceuticals and Utilities & Energy. Tourism also has a strong showing.
* The No. 1 social concern was identified as Pollution and the Environment.
* Respondents in Korea are among the most optimistic about business prospects.
* Respondents in China expect the 2008 Beijing Olympic Games to be transformational for the nation’s economy.
* A greater number of respondents in China say that Southeast Asian businesses are increasingly competitive.

For full survey results, log onto: www.upsinasia.com/abm.

UPS has a strong presence in Asia, with all of the region’s major cities within four hours’ flight time from the company’s intra-Asia hub in the Philippines. UPS flies to more points in China than any other package delivery company and just last year, became the first carrier in the industry to acquire direct control of its operations inside China. That move came at a time when UPS’s China export volume surged 50 percent over 2004. Export volume for all of Asia jumped almost 30 percent in 2005. In other recent news, UPS opened its first branded The UPS Store® outside of North America in Mumbai, India, offering customers there access to a wide range of shipping and business services.

UPS is the world’s largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the flow of goods, information and funds. Headquartered in Atlanta, UPS serves more than 200 countries and territories worldwide. UPS’s stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at www.ups.com.

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Notes to Editors

* UPS Asia Business Monitor series provides the latest insights into the changing opinions, attitudes and habits of business leaders from the region’s small and medium sized enterprises.
* UPS Asia Business Monitor II surveyed 1,203 decision makers of SMEs between November 14, 2005 and January 10, 2006. Interviews were conducted by an independent research organization, TNS, using the respondents’ native language from the TNS International Calling Centre in Hong Kong. SMEs are defined as companies with fewer than 250 employees.
* Interviews were conducted in the following 12 markets: Australia (100), China (151), Hong Kong (100), India (101), Indonesia (51), Japan (100), Korea (100), Malaysia (100), the Philippines (100), Singapore (100), Taiwan (100) and Thailand (100).
* Respondents were from a range of industries: automotive, electronics & electricals, garments & textiles, gifts & housewares, healthcare & pharmaceuticals, timepieces, jewelry & optical goods, toys & sporting goods and others.
* A majority of the SMEs interviewed had an approximate annual turnover between US$500,000 and US$10 million. The average SME has been in business for nearly 22 years.
* Graphs and charts from the UPS Asia Business Monitor II as well as interviews with third-party spokespeople are available by contacting Gerald Lim at UPS on +65 6883 7461 or geraldlim@ups.com.

Contact Information

John Flick

UPS

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