European and US Companies identify Asia-Pacific as priority market for international expansion, study shows
Asia-Pacific seen as a critical opportunity of the future as companies look to diversify and de-risk production and capitalise on higher growth in the region
New research published today reveals that while corporations in Europe and the Americas are prioritising their home regions of Europe (84%) and North America (74%) as a source of growth, Asia-Pacific (55%) is the key target for their international expansion strategies. Other regions scored much lower, with Asia-Pacific followed by South America (38%), Middle East (32%) and Africa (17%).
The survey, commissioned by Standard Chartered bank, found that the COVID-19 pandemic has reshaped many organisations operating and strategic priorities in the Americas. This is reflected in how close to half (49%) Americas respondents indicated that managing the sustained impact of COVID-19 as one of their top three challenges.
The pandemic has pushed diversification to the top of agenda for many, with 37% of American companies noting that diversifying their suppliers outside of their home region is the top priority over the next six to twelve months. This reflects how many companies recognize the need to increase resilience and flexibility in their supply chains in response to the challenges experienced from the pandemic.
However, increased focus on reshoring in the wake of the pandemic’s spread has also upped concerns over the vulnerabilities in shipping goods. Supply chain failure and disruption (21%)was noted as the second highest management challenge for operating overseas for American respondents. They also ranked the ability to understand and comply with local regulations on growth outside the home region as the top challenge of international expansion (32%).
Counter to expectations, only 3% of the respondents in the Americas ranked environmental, social and governance (ESG) criteria and sustainability issues as their top supply chain priority. This could be down to the responsibilities for ESG elsewhere in the organisation, or a view that ESG and sustainability objectives are inherent in the business culture.
“Around the world, companies’ experience of the COVID-19 crisis has inevitably reshaped their priorities and the way they address challenges,” said Torry Berntsen, Chief Executive Officer, Americas and Regional Head, Corporate and Institutional Banking at Standard Chartered Bank. “As businesses explore expansion opportunities, the growth potential of emerging markets such as Africa should not be ignored. Some of the most commonly perceived challenges can be readily overcome with a trusted partner.”