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Allianz Trade Global Survey

Allianz - Global Banking | Finance

Allianz Trade Global Survey

14th May 2024

Hong Kong

8 companies out of 10 are feeling confident about exports: after the storm comes the sun?

From the Covid-19 pandemic to the invasion of Ukraine to revived tensions in the Middle East, crisis after crisis has created a challenging and uncertain environment for exporters. Could 2024 bring some light at the end of the tunnel for companies? To find out, Allianz Trade surveyed over 3,000 exporters from China, France, Germany, Italy, Poland, Spain, the UK and the US for the third edition of its Global Survey.

Optimism déjà vu: are corporates underestimating the risks ahead once again?

In the 2023 edition of our Global Survey, 70% of companies said they expected business turnover generated through exports to increase. But the year ended with a trade recession, with demand slowing more than expected. 2024 is expected to bring about the end of the recession but are companies being overly optimistic again? In the latest edition of our survey, 82% of corporates said they expect business turnover generated through exports to increase in 2024, especially in consumer-related sectors such as retail, household equipment and computers & telecom. In fact, nearly 40% of corporates expect a significant increase of more than +5% in 2024 (+18 pps vs 2023). 

“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. This will also boost prices and fuel reflation: Globally, 8 corporates out of 10 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,” explains Françoise Huang, Senior Economist for APAC and Global Trade at Allianz Trade. 

10 for 10: over 10% of Chinese companies expect export business to rise by 10% and more

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

Non-payment risk is still top of mind for exporters

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

“We found that globally, close to 70% of corporates are paid between 30 and 70 days with the UK, France and the US being slightly more numerous than peers. In a context of lower growth, trade disruptions and geopolitical uncertainty, 42% of corporates are now expecting the length of export payment terms to increase in the next six to twelve months. Longer payment terms mean stronger pressure on cashflow, and the situation might even worsen. Moreover, 40% of respondents are expecting non-payment risk to rise in 2024. This is in line with our forecast for global business insolvencies to rise by +9% this year,” adds Aylin Somersan Coqui, CEO of Allianz Trade.

53% of companies are considering relocating supply chains due to increasing geopolitical concerns…but will they walk the talk? 

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 ESG-related risks. 

“The political landscape, with elections taking place in economies that account for close to 60% of global GDP, is contributing to rising geopolitical risks and increasing uncertainties. In this context, companies are in wait-and-see mode, mostly focused on upcoming national elections. That said, supply-chain exposure can change the risk perception: by and large, companies with long supply chains and more than half of production located abroad are most worried about an intensification of the US-China trade war,” states Ano Kuhanathan, Head of Corporate Research at Allianz Trade. 

In this context, to mitigate supply-chain disruptions, companies 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).

“Diversification has become the main strategy to build supply-chain resilience. But this brings its own risks, increasing complexity and potential choke points, and isn’t a perfect solution. For example, 48% of US exporters that have production sites or suppliers in China would consider countries in Asia-Pacific or Latin America to diversify their supply chains. However, they would still be exposed to China indirectly, given its critical role as a global supplier in the manufacturing sector,” says Ana Boata, Global Head of Economic Research at Allianz Trade.

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 said it would decrease. For those that indicated that they plan to find alternatives to China, the highest share of respondents indicated Asia-Pacific as their preferred region (37%), followed by Western Europe (17%). Within Asia-Pacific, ASEAN captures more than one-third of choices, while Japan, India, Taiwan, South Korea and Australia roughly share equally the rest.

Sustainability gains traction but the race is not over yet

Supply chains are at the core of sustainability and companies are increasingly taking note. 72% of our survey 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%).

“76% of respondents state that their company has a clear plan to transition out fossil fuel, regardless of the prices’ fluctuation. This a big step forward: companies are now focusing on structural initiatives rather than on short-term actions. But there is still a long way to go: nearly 2 out of 3 companies plan to reduce emissions by only 1 to 5% in the next 12 months, which falls short of the effort needed to reach the net-zero target by 2050,” ends Aylin Somersan Coqui.

 (1) The survey was conducted online over three weeks in April 2024.

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