Looking East: The Changing Face of World Business
We are finding that many of our clients are trading cross-border at a much earlier stage then has typically been the case in the past. Here, Paul Hancox of HSBC explains the growing power that Eastern countries are having within the global economy and why it would be a mistake to overlook their increasing prominence.
A fundamental and unprecedented shift is taking place in the global economy. As we see a very clear move from West to East, Asia and other emerging markets continue to assert themselves as the brightest prospects on the global landscape.
The East has long been a force in manufacturing, particularly goods which then make their way over to the West. However, some might not be aware that today, many Asian goods don't go to the West, but to other Asian countries. In India, two thirds of exports now go to markets outside the US and Europe. And in 2010, China became the largest importer of goods from Latin American powerhouse Brazil. We are seeing the emergence of South-South trade: globalisation isn't just a process of goods circulating from developing to developed countries; it crosses and connects emerging markets.
To many businesses in the distant markets of the West, particularly perhaps those in the SME sector, Asia is unknown territory, with many businesses still having outdated perceptions of the region. But the risks of engagement must be seen in the context of the potential rewards.
The developing markets of Asia offer a virtuous circle of economic growth and investment and it is crucial that European businesspeople do not close their minds to the possibilities offered by the rise of Asia. While we talk to lots of businesses who are already creating opportunities in and with the East, we know that for many more, the statistics remain just that, statistics. It is for this reason that last year we commissioned The Futures Company to identify the most influential current and future trends in 'the East' - and interpret these to define practical implications and opportunities for companies domiciled in Europe. These findings were revealed in a report called: 'Looking East: The Changing Face of World Business'.
This report draws on Eastern economies' political, social, financial and consumer climate. It recognises that while every business and every national economy across the world is being affected by this shift from West to East, we will, in the future, see the decline of the western-centric mind-set, and a new way for the world to do business; quite simply, Europe is at risk if it doesn't keep up.
For many European companies, the rebalancing of economic power towards Asia presents a more challenging, more competitive, more threatening business environment. But there are also a huge range of opportunities; the new economic confidence of Asia means new markets, new global wealth and new business.
In summary, the findings provide us with a startling reality check and wake up call for companies; over the next decade, businesses can't afford to wait for business. They have to go where the business is. We are no longer looking at when West meets East but at how the East will redefine the West and how European businesses can respond for success.
If you would like to know more or get advice about expanding your company's trading activities abroad to capture new markets then contact Paul Hancox, International Commercial Manager of HSBC on email@example.com.