The latest HSBC Commercial Banking Trade 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 of the 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 there are significant opportunities 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 & 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.”

Michel Cordina, Head of Commercial Banking at HSBC Bank Malta, concurs: “Countries around the world are shifting towards the production of higher-value goods, opening up new opportunities for companies within emerging markets to expand and grow. This forecast provides HSBC with better insight for understanding which sectors are growing in which markets, and in turn we can support Maltese businesses as we help them grow internationally and benefit from higher growth markets.”  

Emerging markets add ever increasing value to the supply chain

Countries making the move up the supply chain 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.  Export growth in the UK is increasingly being driven by high-technology manufactured goods, as low-cost producers in the emerging markets satisfy an increasing share of demand for less sophisticated products.  In the USA, export growth is driven by three high value-added sectors which will contribute to half of the increase of exports over 2021-20310 – Industrial Machinery, Transport Equipment and Scientific Apparatus.

Industrial machinery opportunity

Industrial Machinery, ranging from large power generating machinery to small parts for domestic electrical items, will extend its dominance as the world’s top export sector.  It will encompass around 25% of goods exported among the top 25 trading nations by 2030, and contribute over a third of the growth in total merchandise exports from 2013 according to the Forecast.

Hubs

Intra-regional trade and reliance on hub cities continues to play a strong role in facilitating global trade flows, as companies look to capitalise on new opportunities while managing their exposure in rapidly developing markets.

For a copy of the Global Connections Trade Forecast report and for further information, log onto http://www.globalconnections.hsbc.com/.  An infographic which portrays key findings from the latest trade forecast is also available upon request.

HSBC’s Trade forecast encompasses trade data for 25 countries and territories key to world trade.

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