Asia-Pacific looks to China as future growth market
Globally, companies are increasingly looking local as they plan for future business, according to a survey by HSBC.
The study authors note that Asia-Pacific firms are specifically looking to China for future growth – at a time when US and European companies are looking away from the region.
‘When asked about their top targets for future trade growth, the number of European companies citing Asian markets dropped from 26 percent in the first quarter [of 2018] to 13 percent now,’ states HSBC’s study of more than 8,500 firms globally as part of its Navigator survey.
‘North American firms citing Asia fell from 33 percent to 15 percent… and more Asia-Pacific companies are looking at China specifically as a future growth market’ – up 4 percentage points to 16 percent. Asian companies citing North America as top for future growth slipped from 29 percent to 21 percent.
Driving the local focus are economic concerns – largely centered around geopolitics and trade disputes – that have pushed companies to turn their ‘attention to intra-regional rather than inter-regional trading opportunities,’ says HSBC. Sixty-three percent of companies surveyed say they think ‘governments are becoming more protective of their home economies,’ adds the bank.
For those companies with a negative outlook on company prospects, tariffs and the US-China trade dispute are the main reasons for pessimism, at 31 percent each. ‘The cost of tariffs is the top concern for US firms with a negative outlook (60 percent), while in mainland China and Hong Kong the political dispute with the US is the greatest concern (65 percent and 53 percent, respectively),’ states HSBC.
Overall, though, more than three quarters (78 percent) of companies remain positive about their trading environment, with ASEAN firms the most positive in their outlook at 86 percent, followed by 82 percent in the EU.
‘Businesses are staying positive, but they’re signaling to policymakers that protectionism is a significant concern that’s reducing their appetite to grow through international trade,’ says Noel Quinn, chief executive of global commercial banking at HSBC, in a statement.
‘Some are looking closer to home for opportunities, and many are adapting their approach to stay fit for the future. We expect technology, digitization and data to play an increasingly important strategic role by enabling businesses to develop their products and services, reach new customers and cut costs by improving operational efficiency.’