Navigating global markets remain challenging as new disruptions take place in a post-Covid-19 world. High inflation, rapid supply/demand fluctuations, geopolitical tensions are a few of the many factors that are impacting global supply chains and limiting the ability of global sourcing managers to secure their supply. With so many factors impacting choices of where or what to source from global markets, returning to the fundamentals is key to ensure sustainability in this dynamic new environment.
Sourcing managers that are proactive in how they address key global procurement fundamentals of why, where, what and how to source globally have many opportunities in the current environment, but getting this right remains a challenge. Below, Axis Group offers insights on where to look and what categories to consider for effective global procurement & supply.
Key Highlights
• China remains the world’s top global exporter and continues to export a wide spectrum of both high and low-value products competitively – a very prominent global player, dominant in many categories
• The US, Germany, Netherlands and Japan remain high on the global export rankings; other countries like Italy, Belgium, France, Canada and the UK remain high as well. Their exports remain concentrated in high-value, high-cost, and technologically advanced products
• Challengers from Asia include India, Vietnam, Malaysia, Indonesia and Thailand; while contenders from the rest of world include Mexico, Poland, Brazil and Turkey
• Dynamic new challengers from Asia, Eastern Europe, and Latam have increased their exports of high-value products, while still competing in low-end, low-cost categories – several offer real, viable, high-end options
• The upshot: a world of opportunities is unfolding for perceptive, analytical, and proactive global procurement managers – now is a time to look beyond the comfortable historical choices
• Imperative: balancing risk & cost is possible even if it requires a new approach to ‘global vs local’ – and procurement and supply executives have more value to add during these times of uncertainty
Where to look in a World of Global Procurement Opportunities?
The continued efforts by countries globally to compete and open their economies in a post-pandemic environment have highlighted the potential of some dynamic new markets that matter. Global trade was severely impacted early in the pandemic, and recovery was slow for many of the traditional global export leaders. However, markets in Asia and other developing parts of the world experienced a faster recovery, most of them seeing growth in their year-on-year exports in 2021. This trend continued in 2022, as more markets continued to grow their exports despite the many challenges in the current global sourcing environment. It is imperative that global sourcing managers observe the opportunity that these dynamic markets present, as they continue to increase their production capacity and exports of increasingly high-value products. Over the short to medium term, the war in Ukraine, risk of a forthcoming recession, and the potential resurgence of Covid present important additional challenges that must be incorporated in planning.
Shift in Global Export Rankings – New Winners, Losers, and some Holding Ground:Since 1990, the global top 30 exporter rankings have changed significantly. Economic growth within emerging markets, with special impetus given to export growth, have led to their rise in manufacturing and export rankings. In addition, there has been a strong link between deepening global interconnectivity, the rise of free trade agreements, and an increase in trade by new countries on the world stage. However, increasing global demand as well as strong exports growth, due to easing restrictions in 2021, led to an overall rebound in trade and commerce in the last two years. What will the new landscape look like?
Trends: China, USA and Germany have consistently been among the top 3 global exporters since 2005. However, there has been dynamic and constant readjustments below the top 3 rankings.
- USA, Germany, Netherlands, Japan, Italy and France remained in the top 10 throughout the period 1990-2021
- China, South Korea, and Hong Kong SAR appear in the top 10 from 2015 onwards, while Mexico has risen to #13 in 2022 (from #20 in 1990)
- Since 2005, Poland, Vietnam and Turkey entered as new top 30 challengers
- Between 1990 and 2010, South Africa and various EU countries (Portugal, Denmark, Finland and Sweden) fell out of the top 30 to make room for the new challengers
- China became a WTO member in 2001, resulting in rapidly rising exports. Its gradual shift from producing and exporting low-end goods to high-quality, high-end manufacturing enabled it to remain at the top of the rankings since 2010
- China’s share of global exports has increased to 14.4% in 2022
- Mexico’s rise from #20 to #13 makes it a key market – and one to watch going forward, even if its current main export destination is mainly focused on North America
- Vietnam entered the top 30 only after 2010 but already reached #23 by 2022 – a stellar rise compared to other countries. Sustained efforts aimed at increasing its manufacturing capacity and reducing its trade deficit has led it to not only benefit from a trade surplus in recent years but also improve its global ranking in exports by a compound annual growth rate (CAGR) of 15% from 2010 to 2022. In 2022, Vietnam’s export growth was 11%
- India, Australia, Poland and Turkey will likely be key markets to watch and countries such as Spain, Switzerland, Malaysia, and Thailand would need to defend their rankings
