According to a new HSBC survey, several companies are increasingly looking for business opportunities within their own regions due to growing uncertainties in the global trading system.
Stuart Tait, Head of commercial banking at HSBC for Asia Pacific said that they are seeing a shift in emphasis on intra-regional trade as intra-Asia has become equivalent to the continent’s trade with Europe and North America combined.
CNBC reported that Asia is becoming more connected, citing Tait at China International Import Expo in Shanghai.
In the HSBC’s survey of more than 8,500 companies, it was discovered that about 63% of firms believed that political headwinds are growing stronger as governments are planning to secure their home economies. As reported in CNBC, the poll was conducted in August and September.
Results of the survey indicated that percentage of firms in Europe and North America reporting Asia as a top target for future trade growth sank in the initial quarter of 2018. Further, companies in Asia citing North America as potential trade target also fell in the same quarter.
On the contrary, companies in North America are planning to do business within the region in the next three to five years. More Asia Pacific companies are focusing on China, particularly as future growth market.
According to Tait, regional trade connectivity trend has been beneficial for China overall. In the recent years, companies in China have moved to manufacture and export to emerging economies in the Asia Pacific region, he added.
Although many firms in the United States remain positive about the outlook of global trade, most companies with negative outlook referred tariffs and trade uncertainty between the US and China as key concerns.
According to Noel Quinn, Chief Executive of Global Commercial Banking at HSBC, growing government concerns about protecting the home economies is reducing their appetite to grow in international trade. While some are looking for business opportunities closer to home, other are adapting new approach for the business to stay strong in the future.
The survey also indicated that 50% of the companies expect free trade agreements which they apply to their home country and industry, to gain advantages for the company over the next three years.