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Treasury & Capital Markets
Despite global tensions exporters optimistic
China corporates most positive, restocking of manufactured goods gaining traction
The Asset 15 May 2024

Despite the tensions between the US and China, as well as, in Ukraine and the Middle East, 82% of corporates say they expect business turnover generated through exports to increase in 2024, especially in consumer-related sectors, such as retail, household equipment, and computers and telecommunications, according to a recent survey.

In fact, nearly 40% of corporates expect a significant increase of more than +5% in 2024, finds the Global Survey 2024 published by Allianz Trade, which polled over 3,000 exporters in eight countries – China, France, Germany, Italy, Poland, Spain, the UK and US – on their export performance, outlook and supply-chain management.

And, while 40% of companies foresee their export business to grow by 5% and more in 2024, Chinese exporters demonstrated a higher level of optimism – 45% expect turnover to grow beyond 5%, of which 11% expect more than 10% growth, the highest among those in surveyed countries.

As far as US-China tensions are concerned, European companies are clearly less worried than US ones, with 39% in Germany and Spain and 33% in France expecting to increase their footprint in China, compared with 27% in the US. Companies in automotive, chemicals, construction, metals and textiles are choosing to increase their footprint in China over other markets.

Risks, disruptions

Though optimistic, exporters, the survey notes, remain well aware of the risks weighing on their international development. Globally, corporates are mainly concerned by geopolitical risks, shortages of inputs and labour, and financing matters. But non-payment risk remains top of mind.

When asked about the top three risks that pose the greatest threat to their offshore production sites and supply chains, companies most often chose issues related to the structure of supply chains, such as complexity, concentration or competition. Risks related to geopolitics, politics and protectionism come next, followed by environmental, social and governance (ESG)-related risks.

In this context, to mitigate supply-chain disruptions, companies, the survey points out, are primarily improving their supply-chain risk management, increasing ESG due diligence on suppliers and buying supply-chain insurance.

But while 53% of respondents say they are considering relocating parts of their supply chain due to increasing geopolitical risks, fewer are actually taking concrete steps in this direction. Relocating production sites does not rank among the top three out of 10 actions proposed to mitigate supply-chain disruption (except for Spanish and German exporters).

And there is no full decoupling from China. In fact, more than one-third of companies plan to increase their footprint in China, while only 11% of companies say it will decrease. For those that indicated that they plan to find alternatives to China, the highest share of respondents indicate Asia-Pacific as their preferred region (37%), followed by Western Europe (17%).

Within Asia-Pacific, the Association of Southeast Asian Nations region captures more than one-third of choices, while Japan, India, Taiwan, South Korea and Australia roughly share equally the rest.

Sustainability

Supply chains are at the core of sustainability, and companies are increasingly taking note. According to the survey, 72% of respondents that have supply-chain responsibilities also have ESG responsibilities.

Yet progress on climate targets remains slow. Only 27% of respondents strongly believe that their companies have implemented ESG actions that have significant consequences on their businesses, ranging from shifting their logistic choices to more sustainable ways (26%) and developing more sustainable products (25%) to improving the climate resilience of their supply chains (23%).

“After more than a year of recession, exporters are now looking forward to a rebound in the second half of 2024 as the restocking of manufactured goods is gaining traction, along with global demand,” explains Françoise Huang, senior economist for Asia-Pacific and global trade at Allianz Trade. “This will also boost prices and fuel reflation. Globally, eight out of 10 corporates expect export prices to rise in 2024, thus supporting their export turnover.

“Our forecasts are more conservative. We expect global trade to rise by +2.8% in value terms in 2024 after a contraction of -2.9% in 2023. That’s significantly below the long-term average of +5%, reflecting the risk of disruptions in global shipping like the Red Sea crisis, as well as rising protectionism.”

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