China, several high-income economies and new challengers from developing countries are driving global supply chain shifts – and ‘supply cluster & category choices’ must dynamically adjust. Post-Covid this is even more true. Axis Group International offers insights 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, and Japan remain high on the global export rankings; also countries like France, the UK, Italy, the Netherlands, and Canada. Their exports remain concentrated in high-value, high-cost, and technologically advanced products
  • Challengers from Asia include India, Vietnam, Malaysia, Thailand, and Indonesia; while contenders from the rest of world include Mexico, Poland, Turkey, and Czechia

Global Procurement Priorities Now

  • Covid continues to create risks and new agendas for procurement managers globally; and China’s Covid-related lockdowns is the latest force for renewed disruptions across regions and industries
  • The war in Ukraine is a new shock that must not be underestimated
  • Re-balance risk & cost – the world of ‘risk & cost’ has shifted, and the changes continue
  • Re-calibrate the supply market portfolio – the mix between China, new challenger markets, and ‘local’
  • Identify over-exposure early – act fast to develop alternative supply
  • Manage increased complexity and global logistics challenges – an integrated end-to-end supply chain solution is needed
  • Exemplary spend analytics and insight (internal orientation) and strategic supply market intelligence (outward orientation) must support decision-making
  • ESG must remain central, especially now – i.e., ethics, the environment, and modern slavery must be in the top of mind
  • Leadership and team strength are differentiators – the pressure is on to lead, upskill, and develop procurement teams and organizational capabilities in the midst of new realities
  • 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 option
  • 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

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, with some even seeing growth in their year-on-year exports in 2021. 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 and China’s Covid related lockdowns 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. What will the new landscape look like?

global top 30 exporters

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

  • USA, Germany, Japan, the Netherlands, France, and Italy remained in the top 10 throughout the period 1990-2021
  • From 2010, Belgium and Switzerland do not appear again in the top 10; however, they remain in the top 10-20
  • China, South Korea, and Hong Kong SAR appear in the top 10 from 2015 onwards, while Mexico has risen to #11 in 2021 (from #20 in 1990)
  • Since 2005, Poland, Vietnam, Czechia, and Turkey entered as new top 30 challengers
  • Between 1990 and 2010, South Africa and various EU countries (Portugal, Denmark, Finland, 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 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 further increased in 2021 as it grew its exports by almost 30%, while global exports rose by nearly 26%, bringing its share of total global exports to over 15% by the end of 2021
  • Mexico’s rise from #20 to #11 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 #22 by 2021 – 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 2021. In 2021, Vietnam’s export growth was 25%
  • India, Australia, Poland, Czechia, and Turkey will likely be key markets to watch and countries such as Spain, Switzerland, Malaysia, and Thailand would need to defend their rankings
  • Exports from China, the UK, Singapore, Taiwan (China), Australia, Poland, Malaysia, Saudi Arabia, Czechia, and Turkey in 2021 rose as their recovery efforts surpassed that of global growth, returning them to pre-pandemic levels of manufacturing and economic activity, and contrasting sharply with the rest of the world
  • The previous 4.7% global trade growth forecast by volume for 2022 by the WTO has been cut to 3% in April 2022 due to “the impact of the Ukraine war and related policies”
new export challengers
growth of top 30 exporters
global trade growth

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 2021 – 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 global recovery efforts in 2021 and H1 2022 bringing forth a new normal, we anticipate:

  • The rollout of vaccines in 2021 have enabled 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 and progress will not be equal or smooth due to lingering supply bottlenecks that remain from past disruptions, as well as ongoing conflict in Europe
  • 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 – this has significant implications for managing risk and cost in the supply chain
  • Raw materials’ availability, capacity issues, container availability, logistics challenges, supply shortages, and price shocks will still 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, but a resurgence of infections and the resultant economic impact may hamper this trend
procurement comfort zones

Imperatives: The past 3 decades have seen many new global procurement opportunities (but also setbacks) 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. The risk & cost equation now looks different. As such, a few priorities stand out for Global Procurement & Supply professionals:

  • 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 models 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, across many categories, several challengers are emerging as alternatives that can 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’ supply markets in the new global context

Procurement managers should also be vigilant on the ongoing geopolitical and international relations issues amidst the war in Ukraine, which will be significant factors in several regions’ and industries’ security of supply

Global Supply Clusters & Category Choices Must Dynamically Adjust

While traditional leaders such as the US, Japan, and Germany remain high on export rankings, markets such as India, Vietnam, Poland, and Mexico have increased their potential to become challengers for global recognition. But what are they exporting? Which categories and product choices can be targeted in these new markets? A quick fly-over suggests that there are a few surprises in store in terms of choices around ‘where and what’ to source. Many countries have, in fact, rapidly climbed the ladder and have more mature capabilities; they often simply no longer live up to (unfair) stereotypes. Herein lies the opportunity for perceptive, proactive, and analytical procurement and supply teams. Astute teams are already working on the new options that exist in balancing risk and cost – and will be rewarded for it. But many organisations and procurement teams are clearly trapped in ‘comfort-zones’ and are clearly far behind in recognizing and tapping the new global procurement potential. They will be penalized in the marketplace.

Ten dynamic markets

China is the largest global exporter, with products on both the high and low end of the value chain. Other developing markets in Asia and the rest of the world have increased their capacity to supply higher value-added products; and with increased importance placed on supplier diversification, these markets should be watched. Below, we take a snapshot of selected dynamic markets, their top 100 export products, and the composition and concentration for these products across industries and sectors.

China

  • The top products exported by China in 2021 were telephones (USD 204bn), computers (USD 204bn), and integrated circuits (USD 155bn)
  • The top sectors were Machinery & Electronics (43%), Chemicals & Plastics (12%) and Metals & Minerals (12%)
  • The top 50 products exported by China constitutes 55% of total exports; top 100 products exported constitutes 69% of total exports
China Top 100 Exports

Mexico

  • The top products exported by Mexico in 2021 were motor vehicles (USD 40bn), computers (USD 33bn), and vehicles for transport of goods (USD 31bn)
  • The top sectors were Machinery & Electronics (35%), Transportation (24%), and Metals & Minerals (10%)
  • The top 50 products exported by Mexico constitutes 75% of total exports; top 100 products exported constitutes 86% of total exports
Mexico Top 100 Exports

India

  • The top products exported by India in 2021 were refined petroleum (USD 54bn), diamonds (USD 25bn), and packaged medicaments (USD 17bn)
  • The top sectors were Metals & Minerals (24%), Chemicals & Plastics (18%), and Fuels (14%)
  • The top 50 products exported by India constitutes 62% of total exports; top 100 products exported constitutes 74% of total exports
India main exports

Vietnam

  • The top products exported by Vietnam in 2020 were telephones (USD 62bn), integrated circuits (USD 14bn), and textile footwear (USD 8.4bn)
  • • The top sectors were Machinery & Electronics (46%), Textiles, Hides & Skins (14%), and Agriculture & Forestry (11%)
  • The top 50 products exported by Vietnam constitutes 73% of total exports; top 100 products exported constitutes 85% of total exports
Vietnam main exports

Poland

  • The top products exported by Poland in 2021 were vehicle parts (USD 14bn), electric batteries (USD 9bn), and seats (USD 7.3bn)
  • The top sectors were Machinery & Electronics (25%), Agriculture & Forestry (18%), and Chemicals & Plastics (14%)
  • The top 50 products exported by Poland constitutes 48% of total exports; top 100 products exported constitutes 65% of total exports
poland main exports

Malaysia

  • The top products exported by Malaysia in 2021 were integrated circuits (USD 60bn), refined petroleum (USD 21bn), and palm oil (USD 14.1bn)
  • The top sectors were Machinery & Electronics (43%), Chemicals & Plastics (15%), and Fuels (12%)
  • The top 50 products exported by Malaysia constitutes 74% of total exports; top 100 products exported constitutes 85% of total exports
malaysia main exports

Brazil

  • The top products exported by Brazil in 2021 were iron ores (USD 45bn), soya beans (USD 39bn), and crude petroleum oil (USD 31bn)
  • The top sectors were Agriculture & Forestry (40%), Metals & Minerals (27%), and Fuels (14%)
  • The top 50 products exported by Brazil constitutes 83% of total exports; top 100 products exported constitutes 89% of total exports
brazil main exports

Thailand

  • The top products exported by Thailand in 2021 were computers (USD 14bn), cars (USD 11bn), and vehicle parts (USD 8.7bn)
  • The top sectors were Machinery & Electronics (32%), Chemicals & Plastics (19%), and Agriculture & Forestry (16%)
  • The top 50 products exported by Thailand constitutes 62% of total exports; top 100 products exported constitutes 77% of total exports
thailand main exports

Czechia

  • The top products exported by Czechia in 2021 were cars (USD 23bn), computers (USD 15bn), and vehicle parts (USD 14.6bn)
  • The top sectors were Machinery & Electronics (37%), Transportation (19%), and Metals & Minerals (11%)
  • The top 50 products exported by Czechia constitutes 62% of total exports; top 100 products exported constitutes 74% of total exports
czechia main exports

Turkey

  • The top products exported by Turkey in 2021 were cars (USD 10bn), jewelry (USD 7bn), and refined petroleum (USD 7bn)
  • The top sectors were Metals & Minerals (25%), Textiles, Hides & Skins (16%), and Machinery & Electronics (15%)
  • The top 50 products exported by Turkey constitutes 51% of total exports; top 100 products exported constitutes 67% of total exports
turkey main exports

Final Word

The world has been a competitive marketplace for hundreds of years and this has intensified over the past 50 years in a globalized world. Events of the past 24 months have only exacerbated the dynamic adjustments that are constantly taking place – and it is clear that there are winners, losers, and those that are holding ground.Astute procurement leaders and their teams are already tapping the new world of global procurement opportunities to drive value for their organisations.For more on Axis Group International’s Global Procurement & Supply solutions get in touch: solve@axisgroup-international.com

procurement leaders
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