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Asian trade corridors to outpace global average by 2030 - Industry roundup: 5 June

Asian trade corridors to outpace global average by 2030

Research by Standard Chartered reveals trade corridors in Asia, Africa and the Middle East are set to outpace the global growth rate by close to four percentage points, driving export volumes in these regions from US$9 trillion in 2021 to US$14.4 trillion by 2030. Global trade over the same period is set to reach US$32.6 trillion, from US$21 trillion in 2021, according to the ‘Future of Trade 2030: New growth corridors’ report.

Thirteen key markets are expected to account for 73% of all exports and 69% of all imports in Asia, Africa, and the Middle East by 2030, with a combined total trade value of US$19.7 trillion, based on analysis of historical trade data and projections until 2030. Mainland China, India and South Korea top the list by volume.

“Global trade continues to present growth opportunities within and across some of the world’s most dynamic regions,” said Simon Cooper, CEO of Corporate, Commercial & Institutional Banking and CEO, Europe and Americas, Standard Chartered. “This research underlines how businesses are diversifying their sourcing and manufacturing decisions and offers practical insights into how this is playing out around the globe. In particular, the adoption of digital supply chain finance solutions could have a game-changing impact on export growth.”

International trade is projected to move away from the West, shifting southward and outward. South Asia will be the fastest-growing export region, driven by strong trade ties with neighbouring regions, including a recent free trade agreement between India and the UAE and Bangladesh’s plans to establish more than 100 special economic zones by 2030.

Standard Chartered surveyed over 100 C-suite and senior leaders from global companies to understand the key drivers of trade growth and the challenges they face. The research revealed the top five concerns of business leaders as being rising geopolitical conflicts and tensions (54%); high and volatile energy and commodity prices (52%); poor infrastructure quality (46%); high inflation (45%); and sanctions, tariffs and export bans (44%).

Using this data and lessons learned from its 2021 report, Standard Chartered has introduced a response framework that focusses on three areas:

  • Rebalance – diversify risks through supply chain reconfigurations.
  • Technology in operation – increase reliability, transparency and resilience.
  • Sustainable trade – enable end-to-end ESG-compliant supply chains.

The bank says that these areas, supported by a combination of ten initiatives, give businesses the tools to effectively formulate a well-rounded strategy to deal with the rapidly changing currents of trade and navigate new and emerging trade flows.

One such tool is adopting digital supply chain finance (SCF) solutions which offer wide-ranging benefits from better visibility of capital flows and tracking of ESG commitments to greater SME participation and increasing trade. Research reveals SCF solutions could boost exports by US$791bn by 2030 across 13 key markets in Asia, Africa, and the Middle East, having the potential to help bridge the global trade finance gap that the Asian Development Bank estimated topped US$2 trillion by 2022.

 

Swedish CFOs optimistic despite challenges

Swedish CFOs have a brighter view of business opportunities and the financial outlook than last autumn, according to the spring CFO Survey conducted by Deloitte and SEB. Organic growth is now the top priority among CFOs, while economic growth is regarded as the most significant risk.

“The macro environment in spring 2023 is still characterised by high inflation and historically high energy prices, but also by a half-year with rapidly rising interest rates,” commented Marcus Widén, economist at SEB. “Even though the economy is still facing strong headwinds, knowledge about the situation is better and a number of risks have ebbed, which is making it easier for companies to glimpse the future. This is leading to favourable business opportunities and financial outlooks.”

The share of CFOs seeing business opportunities as advantageous during the coming six months increased in the spring CFO Survey to 41%, from 38% last autumn. The share who see the future as less favourable also increased, to 23%, compared with 17% last autumn. This means that the indicator, or net balance between those with a favourable view and those with a negative view, has fallen to 18 from 20 last autumn. Even though most responses indicate an optimistic outlook, a more negative view of the situation for the consumer products sector had an impact, making the overall sentiment somewhat pessimistic. However, the financial outlook indicator rose to -12%, compared with -29% last autumn.

Organic growth is the top priority among CFOs, compared with cost-cutting, which had the top priority last autumn. Almost half (49%) of CFOs prioritised organic growth. This was followed by cost-cutting and measures to improve cash flow. Concerning risks, 49% of CFOs feel that economic growth poses a significant risk in the coming 12 months. This makes it the most critical risk, even though it is the one that has also decreased the most. Weak domestic demand and pressure on prices and margins were the second and third top risks cited.

The CFO Survey was conducted in February and March 2023 and is based on several questions that were presented to and answered by selected participants via a web-based questionnaire. The CFOs who participated in the survey represent a cross-section of major Swedish companies from various sectors. 

 

Posco International partners with Contour to digitise trade finance

Contour has announced today that South Korea’s Posco International is joining its production network. As a globally integrated corporation building the future of business, Posco International has over 80 global networks, extending into fields such as energy, steel, agro-resources and components materials. 

The firm is pushing towards a net-zero carbon future by accelerating its adoption of digitisation processes across the board. By joining Contour’s network, Posco International and its trade ecosystem can adopt a fully digital end-to-end letter of credit (LC) settlement process. Using a digital LC reduces the process of presenting documents to under 24 hours and, most importantly, eliminates the need for paper.

Trade finance is heavily reliant on many paper-based processes, which is a serious hindrance to environmental sustainability. Digitising trade finance eliminates the need for paper documents, streamlines the complex process and reduces costs, paving the way for a more efficient and greener approach to business. 

“By digitising the LC process through Contour’s solution, we will simplify trade operations and establish a sustainable trade environment through paperless trade,” said Wonjae Park, Senior Vice President at Posco International. “Posco International will maintain a strong partnership with Contour to lead the digitalisation of trade finance in Korea and create new opportunities.”

 

J.P. Morgan partners with Salesforce to launch Payments Partner Network 

J.P. Morgan has unveiled its Payments Partner Network – a marketplace powered by Salesforce’s Commerce Cloud. The Payments Partner Network features third-party partners integrated with the bank’s platform, making it easy for clients to discover, search, and learn more about relevant J.P. Morgan partner product solutions, unlocking opportunities for growth and efficiency.

J.P. Morgan’s payments business combines the firm’s merchant services, treasury, card, and trade finance capabilities to help clients make and receive payments anytime from anywhere. The Partner Network, initially launching in ‘beta,’ is the first step in bringing together all of the bank’s integrations in a digital platform. It is designed to help clients search, view, and tap the financial services firm’s ecosystem of third-party integrations for end-to-end payment and treasury needs.

“Forty-five per cent of insurance or banking companies plan to prioritise building their own digital marketplace in the next two years,” said Michael Affronti, SVP and GM of Commerce Cloud at Salesforce. “They are easy to scale and adjust for customer preferences, and when powered by the right technology, companies can quickly gain powerful insights through new first-party data and bring together siloed parts of the business.”

Taking learnings from marketplaces like the Salesforce AppExchange, the J.P. Morgan Payments Partner Network promises to:

  • Enable self-service discovery: Platform visitors can view and assess the product integrations that work well with J.P. Morgan and suit their needs.
  • Help businesses scale: J.P. Morgan’s network of integrated solutions aims to fit the needs of businesses as they grow and expand.
  • Facilitate easy implementation: By understanding the partner solutions that are integrated to the bank, clients can save time implementing, allowing them to focus on their businesses.

In addition to the Payments Partner Network, J.P. Morgan unveiled two new connectors for the Salesforce AppExchange – the J.P. Morgan Payments Connecter for B2B Commerce and Order Management and the J.P. Morgan Payments B2C Commerce Cartridge, both featured on the Payments Partner Network. Organisations using Salesforce Commerce Cloud solutions can now connect directly to the J.P. Morgan gateway via a bank connector, facilitating virtual transactions originating in Salesforce and managing everything from customer payment to settled funds in a merchant's account.

 

Most UK business execs see metaverse as opportunity to ‘move the needle’ on DE&I

As business use cases focus on people-centric applications, best practice in diversity, equity, and inclusion (DE&I) becomes critical when building trust in the metaverse. The metaverse is predicted to have the potential to help UK executives ‘move the needle’ on DE&I initiatives, according to research released by EY. As adoption increases and business use cases solidify, bedding in DE&I best practices early on will help UK businesses seize this opportunity.

According to EY’s 2023 Metaverse Readiness Survey, technology adoption is growing. Nearly half (47%) of business leaders are already investing in or using the technology, with 61% believing they cannot afford to be absent from it. When asked how they intend to apply it in a business setting, responses revealed that they’re predominantly people-based and focused on areas such as customer service.

The imperative for organisations is to build trusted customer experiences using the technology. However, the survey has prompted concern that DE&I initiatives are not currently a priority for business leaders as they develop their capabilities, with 39% saying there is a risk that business interests will trump user rights such as accessibility, diversity and inclusion.

That said, there is optimism around the benefits of metaverse technologies in furthering DE&I initiatives if managed carefully. As a result, nearly two-thirds (65%) of the surveyed executives say their companies recognise the DE&I implications and actively look at managing risks. For example, 63% actively support employees/users with physical conditions, like visual impairments, to ensure they can access and work in the metaverse. This proactivity will help build trust in metaverse technologies, with two-thirds (64%) believing it “offers an opportunity to transform our approach to creating a diverse and inclusive workplace”.

“Trust in new technologies, especially where their applications are predominantly people-based, is hard-earned yet critical for their development,” said Laura Henchoz, Emerging Technology Markets Leader EY UKI. “Whether intended for team collaboration or customer support, building experiences that are diverse, equitable and inclusive is central to creating trust in the technology and realising the benefits. The good news is that leaders don’t need to reinvent the wheel. They can build on existing learnings from AI and social media, not only to ensure ethical practices are followed but also to allow for DE&I initiatives to be progressed in new ways. In taking this proactive approach, we could be about to see many exciting applications from early movers.”

 

54% of US small business owners confident in ability to make sound growth decisions

More than half (54%) of US small business owners feel very confident in their ability to make sound growth decisions for their business, according to the first Small Business Financial Confidence Report from American Express. When broken down by business size, only 29% of the smallest businesses say they feel very confident in their ability to make sound growth decisions, compared to 64% of the largest small businesses, highlighting a sizeable confidence gap by business size.

In making business decisions, the US small businesses surveyed are turning to artificial intelligence (AI) tools to help them save time (39%), improve data security (21%), and provide more efficient customer service within their business (20%).

Across all small businesses surveyed, 41% said their business prioritises artificial intelligence to help make business decisions. By size, 16% of small businesses with the fewest employees surveyed say they see the benefits of AI. That percentage more than quadruples among the largest small businesses (75%). Customer service (19%) and marketing (14%) are reported as the primary use cases for these small businesses that use AI. Examining the generational breakdown, Gen-Z and Millennial small businesses (56%) are prioritising AI regardless of business size, more than older generations (24%).

The report also revealed that over half (51%) of the small businesses surveyed are currently hiring, with the largest small businesses much more likely to be hiring (89%) compared to the smallest small businesses (20%). 70% of these small businesses are hiring because of financial growth, the creation of new roles, and a general need. This is particularly true among the Gen-Z and Millennial small businesses surveyed, with 27% listing hiring and recruiting as one of their biggest concerns this year.

The report revealed 32% of small business owners surveyed wish they had more guidance on cash flow, and 31% said they want more guidance on managing expenses. This uncertainty around cash flow is impacting their pursuit of growth opportunities. The data showed 41% of small businesses surveyed ‘often’ or ‘always’ turn down potential opportunities because they are unsure about their cash flow.

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