China, Several High-Income Economies and New Challengers from Developing Countries are Driving Global Supply Chain Shifts

Date: 8 Feb 2021

Since 1990 the global top 30 exporter rankings have changed significantly. Economic growth within emerging countries, 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 interconnectedness, the rise of free trade agreements and an increase in trade by new countries on the world stage. However, the closure of borders as well as the stockpiling of goods for domestic consumption, due to the Covid-19 pandemic in 2020, led to an abrupt decline in trade and commerce. What will the new landscape look like?

Trends: China, USA, Germany and Japan have consistently been among the top 4 global exporters since 2005. However, below the top 4 there has been a dynamic and constant readjustment.

  • USA, Germany, Japan, the Netherlands, France, Italy and the UK remained in the top 10 throughout the period
  • Canada, Belgium and Switzerland fell out of the top 10 but remain in the top 10-20
  • China, South Korea and Hong Kong SAR entered the top 10 and Mexico rose to #11 (from #20 in 1990)
  • UAE, India, Vietnam, Poland, Czechia and Turkey entered as new top 30 challengers – and along with Mexico, peaked in 2019
  • Between 1990 and 2010 South Africa and various EU countries (Portugal, Denmark, Finland, Ireland, Norway and Sweden) fell out of the top 30 to make room for the new challengers
  • Indonesia fell out of the top 30 after 2015
  • China becoming a WTO member in 2001, resulting in rapidly rising exports, and 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 with an almost 14% share of global exports by 2019
  • China’s share of global exports further increased in 2020 as it grew exports by 3.6%, while global exports contracted by close to 10%, likely bringing its share of global exports to over 15 % by the end of 2020
  • Mexico’s rise from #20 to #11 make it a key market – and one to watch going forward
  • Vietnam entered the top 30 only after 2010 but already achieved #22 by 2019 – 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 above 15% from 2010 to 2019. In 2020, Vietnam was the country with the fastest export growth in the world with over 6% growth
  • India, Poland, Czechia and Turkey will likely be key markets to watch and countries such as Spain, Switzerland, Australia, Malaysia and Thailand would need to defend their rankings
  • Despite the pandemic, in 2020 exports from Vietnam, China, Taiwan, China and Hong Kong SAR rose as their recovery efforts surpassed that of other countries, returning them to pre-pandemic levels of manufacturing and economic activity, and contrasting sharply with the rest of the world
  • In the second half of 2020 Mexico, Poland, Czechia and Turkey also showed an earlier recovery

Upshot: Since 1990, the top 30 exporters have faced varying levels of disruption due to a 30-year process of dynamic adjustment. For each interval – by 2000, 2010 and 2020 – the landscape had shifted significantly due to global competition with 3 broad categories emerging – new winners, losers and those that are holding their ground. The pandemic saw these shifts exacerbated with both developed and developing economies suffering a reduction in demand, production and exports. With recovery efforts underway globally towards the end of 2020, we anticipate:

  • The rollout of vaccines in 2021 will enable the focus to gradually shift from efforts to curb the spread of the virus to economic recovery measures; therefore, stimulus and efforts to return to pre-pandemic levels of industrial activity will ensue – but the playing field will not be equal or smooth
  • Expect variability and volatility in different countries’ recovery speeds with many false starts and setbacks for at least several countries in terms of GDP growth rebound, export demand, industrial production and actual exports
  • Raw materials’ availability, capacity issues, container availability, logistics challenges, supply shortages and price shocks may be some of the challenges to manage
  • East Asian economies are relatively stable and hence may pull ahead sooner than most, acting as an engine of global economic growth

Imperatives: The past 3 decades have seen opportunities and threats arising from globalization and more integrated supply chains. Variability in economic acceleration and slowdowns, political instability, natural disasters as well as health crises impacted the flow of trade for many countries. However, the impact of the Covid-19 pandemic on global exports and competitiveness has led to an unprecedented entry into a new world of change and risk for international procurement and supply. As such, for Global Procurement & Supply professionals a few priorities stand out:

  • Fully appreciate the tectonic shifts that are occurring in global export competitiveness over the short, medium and long term; and monitor the new unfolding spectrum of countries and ‘best fit’ supply markets – and their ability to produce across different tiers of value-add, product complexity and cost
  • Continuously map incumbent suppliers in this evolving overall picture to understand the array of supply options in their current supply markets, countries that are slipping and new markets that matter
  • Ensure good spend analytics and insight (internal orientation) and strategic supply market intelligence (outward orientation) to support decision-making
  • Revisit operating model and step through strategic decisions such as ‘buy vs make’, vertical integration options and insourcing vs outsourcing choices
  • Assess and position appropriately across the different strategic options such as sourcing locally vs globally across critical spend categories – and calibrate the potential mix of offshoring, reshoring, nearshoring and onshoring activities
  • Avoid single-source thinking, over-dependence on too few supply markets (risk) and under-exposure to viable supply markets (opportunity)
  • Get the mix right – China continues to be a dominant or at least prominent player in global supply chains; but several challengers are emerging as alternatives and must be pursued
  • Entrench and develop high performance teams with the skills and capacity to manage a complex portfolio of suppliers across a potentially diverse selection of ‘best-fit’ global supply markets in the new context


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