Shifts in World Trade open up business prospects
THE latest HSBC Commercial Banking Trade Forecast (‘the Forecast’) details a shift towards the production of higher-value goods around the world, presenting opportunities for forward-thinking companies looking to expand.
Rapid industrialisation and increasing wages, coupled with maturing consumer demand in many countries along the South-South corridor are driving different types of global trade growth. This report highlights how these trends are changing the types of goods imported, manufactured and subsequently exported.
As countries shift towards higher value sectors, significant opportunities pave the way for companies to evolve and grow. The reports for countries such as Vietnam and Bangladesh show a shift from basic commodities trading in sectors such as cereals or sugar, to become a refiner or producer of branded goods based on those raw materials. In many of the developed markets there is a shift towards increasingly specialised sectors such as chemicals and pharmaceutical products as companies seek opportunities for higher returns.
This shift towards the production of higher value goods is particularly evident in Asia, with a clear pattern emerging as Chinese export growth in information and communications technology and industrial machinery gathers pace. This balances a declining rate of growth in sectors such as textiles, giving rise to opportunities for companies in the smaller, faster growing countries around the region to win contracts to produce these more basic goods. James Emmett, HSBC’s Global Head of Trade and Receivables Finance said, “Emerging markets are developing at a phenomenal pace and are set to reshape world trade patterns over the next 20 years. By expanding their operations in to new, higher value sectors, they are driving more developed nations to specialise and diversify to compete. Understanding which sectors are growing in which markets, delivers huge opportunities for businesses as they plan for the future and aim to capitalise on these trends.”
Emerging markets add ever-increasing value to the supply chain as countries make the move up and most notably are Malaysia and Argentina. Malaysia’s top exportable goods will shift from lower-value sectors such as animals and vegetable oils to higher-end industrial machinery, which will make the largest contribution to Malaysia’s export growth by 2030. Argentina’s top export sectors will change from animal products to transport equipment and industrial machinery.
The Forecast identifies that developed nations, including the USA and UK, will also evolve the goods they export. Both nations will continue to trade in industrial machinery, but increasingly at the higher-end of the sector.