Only five per cent of those surveyed said that China's consumer market would never grow as large as that of the US. More than half (57 per cent) said the two markets would reach parity within 10 years, with 20 per cent of those respondents expecting the gap to close within five years.

"These findings are significant because these small business leaders on the ground in many Asian economies say that China's consumer market is growing faster than some leading researchers project," said Alan Gershenhorn, president of UPS International.

"American businesses must understand that their future customers are just as likely to hail from Beijing as from Boston."

The business executives were interviewed for the UPS Asia Business Monitor, an annual survey designed to gauge the competitiveness of small- and mid-sized enterprises in Asia. About 1,200 SME decision-makers were interviewed across 12 different markets in the region.

Survey respondents ranked China as the country with the greatest prospects for economic growth, followed by India and Hong Kong. But there was ambivalence about China's growing economic power.

Asian SME leaders seemed equally divided between those viewing China's continued dominance as a boost (34 per cent) and those who perceive it as both a boost and a threat (34 per cent). Many also feel they are unable to compete with Chinese companies in terms of low labour and production costs (38 per cent), and there is a growing concern regarding increased price competition (25 per cent).

In contrast, SME leaders across Asia expressed a desire to capitalise on India's rapid growth by leveraging its continued rise as a manufacturing base (30 per cent) and outsourcing there (25 per cent). In line with this growth, SME leaders also express a desire to become an outsourcing destination for India (20 per cent), and an exporter of raw materials to India for manufacturing (19 per cent).

Eighty-five percent of respondents said that India is or has the potential to be a regional economic leader, and 81 per cent said that India's economy is certain to grow in 2007.

Small business leaders in India were the most optimistic in the region, with 89 per cent of respondents expecting greater economic prospects for their businesses in the year ahead.

Small business leaders in India also were optimistic about their country's trade growth, with 83 per cent saying that they project US-India trade to grow strongly this year - up significantly from last year's survey.

Although bullish on the region's growth prospects, survey respondents also warned about threats to the region's competitiveness such as a lack of innovation, the availability of a qualified workforce and access to funding and working capital.

The top three business concerns that keep small business leaders up at night in Asia are the quality of their services (50 per cent), customer loyalty (48 per cent) and the retention of quality employees (47 per cent).

Small business leaders said they expect intra-Asia trade growth to continue its upward climb, with 74 per cent of respondents saying that regional trade will grow strongly in 2007.

Job prospects are favourable with 89 per cent of respondents across all countries expecting to maintain, if not increase, the size of their workforce.

Close to three-quarters (72 per cent) of business leaders in Japan said that the country's ageing population coupled with its low birth rate would have an adverse effect on business competitiveness.

A majority (85 per cent) of small business leaders in India said that globalisation had been a benefit to their businesses, whereas 55 per cent of business leaders in Japan said it had been a disadvantage.

Almost one-third of small business leaders (29 per cent) outside of China said social inequality and environmental issues were worse in China now than one year ago.

The Nation