Globalization of Sourcing

Transcription

1 Globalization of Sourcing What next for Asia and the world?

2 KEY TREND Much has changed in China Automobile sales Minimum wage Shanghai flat Big Mac 2 M $55 $50k $ M 2013 $ $230k 2003 $ *Guangdong *70 sq m GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 2

3 KEY TREND U.S. consumer imports from Asia Market share 2013 Annual change Asia s share of U.S. imports is already high. Market share gain is either slowing or reversing. 60 Fabrics 72% 2.1% 2.3% 61 Non-knitted apparel 67% 3.1% 0.3% 62 Knitted apparel 71% 3.1% -0.5% 64 Footwear 83% 1.8% -1.1% 85 Electrics & electronics 60% 1.6% 0.7% GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 3

4 KEY TREND No simple substitute for China GDP $bn China Cambodia s GDP is the same size as the GDP of a suburb in the southern city of Guangzhou. GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 4

5 KEY TREND U.S. knitted apparel imports Change in market share China is losing market share to mainly low-cost Asia competitors, but also some non-asian. China Vietnam Cambodia -0.3% 2.3% 0.4% Sri Lanka 0.5% Other 2.9% Note: HS Code 61 GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 5

6 KEY TREND U.S. electrical and electronic imports Change in market share Korea and Taiwan continue to lose market share. No real change to a 20-year trend. China Korea Taiwan 4.4% -0.9% -1.5% Malaysia 0.6% Other -2.6% Note: HS Code 85 GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 6

7 KEY TREND U.S. footwear imports Change in market share High-cost Italy has made ground at the expense of China, as have other European countries China Vietnam Italy -7.4% 4.0% 1.0% Indonesia Other 1.8% -0.5% Note: HS Code 64 GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 7

8 MAJOR CHANGE Asia s youth labour shortages will worsen CHINA BANGLADESH +4-8 MYANMAR -2-2 The next 15 years compared to the last 15 years INDIA THAILAND -3-4 VIETNAM -3-7 PHILIPPINES MALAYSIA Million person aged 0 to 29 years of age Change between 2000 to 2015 and 2015 to 2030 INDONESIA -1-9 GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 8

9 MAJOR CHANGE Is Sub-Saharan Africa the next big thing? NORTH AFRICA EASTERN EUROPE (non Russia) ASIA (non Japan) SUB-SAHARAN AFRICA LATIN AMERICA Million persons aged 0 to 29 years of age Change between 2000 to 2015 and 2015 to 2030 GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 9

10 MAJOR CHANGE Europe and near-sourcing trends Change in U.K import market share Percentage points, and Knitted apparel EASTERN EUROPE -0.6% +0.1% Non-knitted apparel -5.6% +0.6% Furniture +0.6% +2.3% TURKEY NORTH AFRICA Knitted apparel -2.8% +0.2% Knitted apparel -1.4% -0.2% Non-knitted apparel -2.3% +0.2% Non-knitted apparel -3.7% +0.4% Furniture -0.6% +0.0% GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 10

11 MAJOR CHANGE United States and near-sourcing trends Change U.S. import market share Percentage points, and LATIN AMERICA & CARIBBEAN Knitted apparel -8.0% -0.7% Non-knitted apparel -10.8% +0.0% Furniture +0.0% -1.3% GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 11

12 MAJOR CHANGE Global consumption in 2000 $8 T $6 T $1.1 T $1.1 T $7 T $2.5 T $0.4 T Household consumption US$ trillion GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 12

13 MAJOR CHANGE Global consumption in 2030 $18 T $16 T $7 T $11 T $2.1 T $4.5 T $33 T LATIN AMERICA Not as big as Asia, but growing in relative importance. SUB-SAHARAN AFRICA Remains relatively small in spite of young population ASIA Asia s market is almost twice that of Europe and the U.S. Household consumption US$ trillion GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 13

14 KEY TREND China s imports of clothing and footwear Non-knitted apparel Knitted apparel Footwear $0.8bn $1.3bn $0.7bn $1.7bn $1.0bn $2.6bn Market share in 2012 Italy 17% Turkey 7% Vietnam 7% North Korea 5% Bangladesh 5% South Korea 4% Market share in 2012 Italy 19% North Korea 14% Vietnam 6% South Korea 4% Romania 4% Turkey 4% Market share in 2012 Italy 26% Vietnam 24% Indonesia 9% U.S. 5% South Korea 4% Spain 3% Cambodia 4% France 4% Taiwan 2% GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 14

15 KEY TREND Africa as a China + 1 option The World Bank recently interviewed 300 firms in China, Ethiopia, Tanzania, Vietnam and Zambia, as well surveyed another 1,400 firms, in order to identify key issues for sub- Saharan Africa s light manufacturing opportunities. Input industries Trade logistics Access to finance Access to industrial land Worker and entrepreneurial skills Source: Light Manufacturing in Africa, The World Bank, 2012 GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 15

16 MAJOR CHANGE The next wave of Chinese outbound investment China has 1.3 billion consumer and a GDP growth rate of 8% The rest of the emerging world has 4.4 billion consumers and a GDP growth rate of 4.5%. If you were a Chinese entrepreneur, where would you invest? Dalian Wanda buys AMC Cinemas in Brightfoods buys Weetabix Cereals in GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 16

17 CASE STUDY Premium food is the next big thing China s Bright Foods acquired Australia s s Manassen Foods in 2011 and the company s portfolio of food brands Manassen Foods owned iconic Australian brands such as Sunbeam. The company has experience as both a distributor and brand owner. Bright Foods has been acquiring premium food brands globally. GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 17

18 KEY TREND Growing numbers of affluent and online consumers China in 2005 China in million Households earning more than US$15, million Households earning more than US$15,000 17% Urban internet penetration rate 60% Urban internet penetration rate GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 18

19 MAJOR CHANGE The rise of Asia s mid-sized cities Asia has 270 cities with populations US greater than 750, The United States has just 59. City population by relative size GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 19

20 CASE STUDY Mothercare looks to Indonesia s remote cities Mothercare launched an online platform in Indonesia to better tap the archipelago's population Mothercare has 46 stores in five cities across Indonesia. However, the company s online website offers delivery to any city, including those without a Mothercare store. Mothercare also offers a gift registry for friends and relatives. GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 20

21 CHINA VIEW Leverage levels differ by region and city Looking at leverage on a municipal basis shows the western regions and some coastal regions as highly leveraged. Circle size indicates relative municipals i loans to municipal i GDP ratio Source: CEIC, SRA GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 21

22 CHINA VIEW Which China? China Inland China China s city clusters GDP: $8,220 bn GDP: $3,658 bn GDP: $4,700 bn Population: 1,360 mn Population: 720 mn Population: 235 mn Latin America GDP: $5,630 bn Population: 466 mn Sub-Saharan Africa GDP: $1,305 bn Population: 875 mn Brazil GDP: $2,250 bn Population: 201 mn Source: SRA, World Bank, IMF GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 22

23 Helping our clients grow their commercial footprint in China, Southeast Asia, and the Middle East Helping our clients grow their commercial footprint in China, Southeast Asia, and the Middle East About Silk Road Associates Silk Road Associates is a strategy consultancy helping clients grow their commercial footprint across the Silk Road region with a focus on China, Southeast Asia, and the Middle East. Weprovide a range of services from business strategy, marketstudies andoperational support. Our directors include experienced consultants, business strategists, economists, and operational specialists. Our clients are present in a variety of industries and include multinationals, mid market companies, and financial institutions. Hong Kong 1801 Wheelock House 20 Pedder Street, Central Melbourne 8/350 Collins Street Melbourne, 3000, Victoria +61 (3) Founded by Ben Simpfendorfer, a world leadingleading specialist in the commercial rise of Asia and the Middle East, we understand the challenges of operating across multiple countries and within an increasingly interconnected region. With offices in Hong Kong, Beijing, and Melbourne, we also provide insightful and independent local knowledge on the region s fast changing markets. Visit us at GLOBALIZATION OF SOURCING SILK ROAD ASSOCIATES 23