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t the recent CEO Summit in APEC 2015 in Manila, US President Barack Obama surprised the audience by facilitating a doubly symbolic conversation between Jack Ma, founder of Alibaba, and Aisa Mijeno, a Filipina saltwater lamp entrepreneur.

Prior to the summit, it was clear that at least in the Economic Leaders'€™ Meeting itself, the South China Sea/ West Philippine Sea issue was not going to be a topic for closed-door plenary discussion.

 But here were leaders from the two largest economies of the world, one public and another private, taking on the heart of the Philippines APEC 2015 theme of inclusive growth in Asia-Pacific, right before a world audience.

And on a matter centered on water '€” but one that sheds light for peaceful development purposes '€” talks of peace and prosperity could not have been far behind!

 However, more immediate in the minds of many participants at the other APEC Summit, on small
and medium enterprises (SMEs), was the rather mundane question: How do small businesses like Aisa'€™s really get to enter global markets in today'€™s world?

With inferior resources, they must create superior strategies! That must have been the reason why Obama matched Ma with Mijeno on the spot.

Knowing that constraints on finance (and sometimes market information, human resource and technology) face them, SME entrepreneurs no longer have to curse their world; they can light their way out of the darkness surrounding their businesses.

Could it be that what is true of small business must ring true as well for countries challenged by larger powers?

Providentially over the past year, Alibaba has forayed into the arena of financing SMEs, and Obama made Mijeno aware of this possibility.

After all, e-commerce providers are in the best position to know who good prospects for scaling up are, based on track records of their own businesses, by mining the transactions data from their portals. More than money, however, Ma offered Mijeno entrepreneurship seminars under Alibaba'€™s wing.
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E-commerce providers are in the best position to know who good prospectsfor scaling up are.

Indeed, tying up with larger enterprises is one such superior strategy. This is a major finding of the study of the Asian Institute of Management presented to the APEC Business Advisory Council (ABAC) on '€œSmall business as part of big business global value chain'€ for the consideration of APEC Economic Leaders in their 2015 Summit in the Philippines.

Among others, this has led to a technical report on a score of business case studies, and an inspirational book, Going Global Together, presented by Jikyeong Kang, Asian Institute of Management (AIM) President and Dean, to the ABAC meeting before the APEC Summit.

In the AIM study, the Alibaba e-commerce story is celebrated as one of the most dramatic ways by which small businesses are able to penetrate unheard of global markets in the new millennium.

Taobao Villages in China have been identified by Alibaba where more than 10 percent of economic activities are generated through e-commerce transactions '€” and they sell to all corners of the world, exemplars of new local economies empowered by the information and communication technology (ICT).

Traditionally, large enterprises see small businesses as mere suppliers for the things they produce or distribute. But as the world of business becomes more complicated, new relations are formed.

These give rise to indirect ties between SMEs and big business '€” some for enlightened self-interest (like reducing transactions and production costs when suppliers are assisted in many ways, as in Caterpillar'€™s Supplier Diversity Program).

Other large businesses, however, respond to newer calls that respect people and the planet '€” through multiple bottomlines as in El Nido Resorts in Palawan or corporate social responsibility structures that spawn local community development as in Double A Paper'€™s eucalyptus projects for rice farmers in Thailand using the earth mounds dividing paddy fields.

The social enterprise CHEERS, a disaster management company trains emergency responders and produces ready to eat meals in communities prone to calamities.

Indeed, more fragmented global value chains (GVCs) offer new opportunities for MSMEs through various means other than as direct suppliers to large enterprises.

They can buy IT and other products from other groups related to or independent of these large enterprises, notably through e-commerce platform services as in many other versions of Alibaba, one of which is a Chinese portal Qifa selling shoes exclusively to Russia.

They can also be recipients of innovative financial resources as in Maybank Islamic'€™s risk-sharing model based on sharia principles, or Indonesia'€™s Rajawali Taxi Express funding of cab driver vehicles.

Big enterprises train human resources for the international production network as in Australia'€™s cocoa industry assistance in Vanuatu for high-end chocolatiers, or PepsiCo Mexico'€™s sunflower seed oil extraction for use in its potato chips, or Vietnam'€™s AGPPS consolidation of small farmers into large-scale rice cultivation.

These need not be necessarily for the immediate benefit of the big business partners, if at all, because the MSMEs can be indirectly linked to big business which may provide public goods through, e.g., private grant-giving institutions, a legitimate part of the GVC as in Bill and Melinda Gates funding of International Rice Research Institute projects.

Other examples of indirect connections are through the subsidiaries of large enterprises (numerous companies of Inventec of Chinese Taipei for cloud computing), or venture capital funds (Ayala Group and SingTel'€™s Kickstart creating new apps for unemployed youth, hard-to-reach drugstores, lending to the unbanked vetted via social media).

Then there are corporate social responsibility systems (Chinalco mining case in Peru) and industry associations (Aero Montreal'€™s Mach Initiative for production of parts for the aerospace industry in Canada).

Finally, private partnerships with public agencies are able to help MSMEs '€” as in state-owned banks tapped by civil society for marginal communities for many agriculture inputs used in food processing as in Jollibee Foundation'€™s Farmer Entrepreneur Program, and ecosystem for startups combining many departments of bureaucracies, industry groups, and educational institutions as in Korea'€™s Startup Alliance.
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The writer is a professor at the Asian Institute of Management (AIM) in Manila.