Europe's Changing Role in Global TradeAlan Keir
If the world needed a reminder of the importance of international trade, the global downturn couldn't have made the point more clearly. While trade was itself slowed by the challenging financial climate, it nonetheless served as a driving force behind economic recovery and as a catalyst for growth amid tough times. International trading expands the horizons of businesses, offering more opportunities for growth, development, and profit-building than a solely domestic enterprise could ever have.
But while businesses may be aware of the benefits of going overseas, moving from a domestic business strategy to one with an international mindset and approach can be a daunting prospect. That's why HSBC (HBC) commissioned Delta Economics to write Mapping the World's Trade Connections, the first report of its kind to establish a definitive picture of how the world trades today, including which countries are trading with each other, which sectors are seeing strong international growth, and where the hot spots of the future may lie.
Bringing together extensive international trade data, the opinions of 50 businesses from around the globe already successfully trading internationally, and expert insights by HSBC trade chiefs, the report's authority lies in the breadth of opinion and practical information it draws on to support business leaders in their decision making.
Where the Rising Stars Are
Mapping the World's Trade Connections establishes not just which countries present the greatest future growth potential for European businesses, but also which specific sectors and industries will most likely see growth—and where on the world map these opportunities will occur.
The report notes that new "rising stars" are appearing all over the world. While the phenomenal growth of both Brazil and China has been well documented—and both countries will clearly be significant players in the future—Mapping the World's Trade Connections reveals that other nations, perhaps lesser-known for their trade prowess, also are making their mark.
Several African nations, for example, are taking their place in the spotlight. Such countries as Ghana and Ethiopia boast young, entrepreneurial populations. They also share a strong commitment to change, which can potentially produce significant opportunities to pursue growth. Ethiopia is already capitalizing on external interest; Chinese investments there are helping to overhaul and modernize the agricultural sector. Infrastructure development also remains a key priority and is likely to lead to further opportunities for international businesses.
South Africa, still benefiting from the World Cup's boost to infrastructure investment and morale, is also seeing strong demand for its commodities. It came through the downturn well—thanks in part to being less integrated into the world's financial system—and has strong mining revenues. The country's future focus is likely to center on exploiting trade opportunities with emerging economies, in particular forming partnerships with emerging Asian nations.
Eastern European countries also are experiencing high growth, with international trade rocketing in both Poland and the Czech Republic. Kazakhstan, meanwhile, is experiencing rapid growth in its commodities exports—growth heavily influenced by its strength in oil and gas. In all these hot spots, opportunities abound for European businesses to support infrastructure development and satisfy the resulting demand for commodities.
But with so much focus on emerging nations, what part will Europe play in global trade in the future? Mapping the World's Trade Connections found that while Europe is still important in global trade, its role is changing significantly. In the future, Europe is likely to be less of a consumer on the global stage and more of an innovator, capitalizing on its renowned leadership in cutting-edge research, its recognized strengths in high-value manufacturing and design, and its access to ideas, innovations, and networks. Essentially, Europe's future will rest on trading skills, not products.
Role of 'Thinking' Businesses
The experts interviewed for the report felt that while emerging markets may offer the greatest opportunities to make quick profits, "thinking" businesses will need to capitalize on the strengths of both emerging and developed markets. In Europe that means maximizing the continent's experience, knowledge, and skills. Europe's reputation as a provider of specialist knowledge will render it an attractive option for businesses in emerging markets that are looking to establish strategic partnerships to further their growth.
What of European businesses keen to form such partnerships overseas? Mapping the World's Trade Connections recommends taking a multidimensional approach, conducting detailed research into potential new markets, and ensuring your business is ready to trade internationally. That includes taking necessary steps to mitigate the risks—such as the logistics of overseas transport and managing business cash flow—that overseas expansion may present. Spending time considering your business finances and seeking expert advice from organizations, including banks and government trade groups, are further crucial steps.
The message from the report is, above all, to ensure you understand global trade, how the international outlook is changing, and how best your business can capitalize on the opportunities these changes will bring.
To view or download a free copy of Mapping the World's Trade Connections, click here.