The Coronavirus (Covid-19) outbreak started in China in November 2019. In addition to its terrible impact on human health and mortality, one of the immediate consequences of the pandemic is the massive disruption of global trade. According to UNCTAD, global exports could drop by US$ 50 billion as a result of the closure of factories, shops, and the imposition of travel restrictions. In particular, global value chains dependent on China, still the worst affected country, has suffered significantly. China is the world’s foremost supplier of goods, delivering 13% of world exports in 2019. It is an essential supplier of intermediate inputs such as precision instruments, machinery, automotive, and communication equipment, on which countries in especially the EU, the United States, and Japan depend.

In recent weeks there have been reports of precipitous declines in exports of everything from items such as Australian wine, New Zealand logs, and lobsters, American soybeans, to Brazilian beef and German automotive parts to China.

While China is opening up to the world of trade again, as a result of the Coronavirus shock, it is expected that many companies will critically re-evaluate and possibly reduce their dependence on China. They will try to re-shore their value chains or to spread their value chains geographically, with redundancy in mind. It is expected that many companies will critically re-evaluate and possibly reduce their dependence on China. Many countries will also try not only to reduce their dependence on Chinese imports but also to find alternative markets for their current exports to China — in other words diversify.

However, it is key that companies proactively start strategizing on how to identify and capitalise on opportunities post COVID-19 and lock-down to ensure they create new business and recover.

To this purpose we propose that the world of global trade is changing and will be quite different after the pandemic, with three main themes emerging, namely:

• Anti-globalisation and protectionism on the rise: pre-COVID-19 already anti-globalisation and re-shoring trends (e.g. USA & UK) have already started influencing global trade patterns and will continue to do so;
• Changing sentiment: since the COVID-19 event, underlying sentiment against China has changed, both from supply and demand perspective; and
• Risk mitigation and the need for geographic diversification: as a result global value chains and multi-national companies have realised that regional diversification in global value chains are required to mitigate against such further potential future events – hence are and will be re-evaluating their current strategies.

These 3 underlying shifts will most likely lead to a major change in global trade patterns in the next few years…

Big data analytics can be useful to help find such alternative export markets. The adjective “big” truly applies to global trade data. The UN Comtrade database contains bilateral trade data between 200 plus reporting economies and in more than 5000 coded goods.

Over the last 20 years the North-West University (South Africa, Potchefstroom) has developed an approach to help exporters identify realistic export opportunities by considering many different facets of international trade through big data analytics.  Trade Advisory (a spin-out company of the NWU) has commercialised the methodology for everyday practical use. This methodology has successfully been applied for country strategies (e.g. Netherlands, Belgium, Thailand, Botswana and South Africa). Most recently (Feb 2020) Trade and Investment Queensland (Australia) has commissioned Trade Advisory to develop the model for Australia and the State of Queensland in particular.

Join us for a discussion focused on informing on these themes and providing direction on where potential opportunities for product-based trade may be emerging, with a focus on bi-lateral opportunities between Australia and South Africa as informed by Trade Advisory’s TRADE-DSM models for both South Africa and Australia.

 

Programme:

8:00 – 8:10  Introductions & context setting

Chris Hamilton and H.E. Ms Gita Kamath

8:10 – 8:30  Global developments – is the glass half empty or half-full?
Presenter: Francois Fouche, Trade Advisory

8:30 – 8:50 Realistic export opportunities, an initial analysis:  Australia and South Africa
Presenter: Martin Cameron, Trade Advisory

8:50 – 9:00 Q&A and closure

Kym Fullgrabe – Vote of thanks

 

Trade Advisory, Who we are:

Trade Advisory (a spin-out company of the North-West University, Potchefstroom, South Africa) specialised in international trade and economic development. A core focus is the identification of realistic export opportunities based on a well-researched approach acknowledged by the WTO as a trade facilitation tool. For more information see www.tradeadvisory.co.za and commerce.nwu.ac.za/trade.

 

About the presenters:

Martin is a quantitative economist specialising in Quantitative Executive Decision Support modelling, Economic Impact Analysis and Engineering Management Decision Support. He has extensive experience in  international trade and energy economics

Francois started his professional career as an economist at Wharton Econometric Forecasting Associates (WEFA) Inc, a USA-based commercial think tank founded by Nobel Prizewinner Dr Lawrence Klein.

See: http://tradeadvisory.co.za/about-us/