The horrific events in Paris were very much in the hearts of participants, and even in that sadness there was a palpable sense of determination, particularly among several French delegates with whom I interacted over the summit weekend.

One gentleman, whose wife is a medical professional at a hospital near one of the hardest hit areas, reminded us that it was France that brought the aspiration of “Liberté, Egalité, Fraternité” to the world.

The heartfelt comments of IMF Managing Director Christine Lagarde on a panel at the B20 session were equally moving in their reminder of the value of even an expression of support and concern for friends and colleagues across France.

The words to inspire us all

The parallel tone of the event, and the privilege of being “in the room” at the B20 was brought sharply into focus for me in Frankfurt, just before leaving for Turkey. It transpired that a woman behind a cash register whom I spoke with briefly had just been to Antalya.

Her parting words, “do your best for the rest of us,” echoed in my mind several times over the next few days, even though I did not have the opportunity to express to this citizen approaching her retirement that my involvement was very narrow, peripheral and limited.

Her words should, however, resonate with those leaders in Antalya in the business community, and certainly in the political leadership, as well as various complementary streams of activity.

The privilege of true leadership should come with a compelling sense of duty to ‘do the best for the rest of us’ and a determination to deliver substantively, even on the toughest issues.

Today’s strong leadership is looking at the bigger picture

As an unabashedly proud Canadian, it was excellent to see our new Prime Minister make his international debut at the B20 session in Antalya, very warmly received by top business leaders and the heads of various international organizations who shared the podium with Prime Minister Trudeau.

It was good to hear Financial Stability Board Chair and Governor of the Bank of England Mark Carney (another fellow Canadian) speak with focus and authority on the efforts underway to assure long term stability in the global financial and economic system.

And from the perspective of the work of our Task Force, it was inspiring to hear Governor Carney specifically mention trade finance in his remarks.

Trade finance is an esoteric domain, the critical importance of which is increasingly appreciated in business and political circles today.

Business leaders, including the CEOs of Coca Cola, Nestlé, SEB Bank, Sabanci and numerous others, were in attendance, as were the heads of the IMF, the WTO, the OECD and the International Chamber of Commerce. One striking undercurrent in the formal remarks, and in the exchanges which followed, is a sense among even the most hard-core business leaders that we need to start thinking more, and more seriously, about the bigger picture.

Numerous interventions reflected notions around the social responsibility of business, the role of commerce in international development, poverty reduction and peace and security. Chief among them was the imperative for executives to think long-term, and to think strategically about issues like sustainability and climate change.

This discussion is crucial, even as some sectors struggle with post-crisis regulatory issues, inconsistent legal standards across borders and issues like skills gaps and labour mobility.

Critical role of international trade in economics and sustainability a common thread

A cynical view might suggest that such musings are shaped by the context, and by the high visibility of the B20/G20 event. However, the sincere non-verbal cues – of certain speakers in particular – were undeniable, and the global nature of the gathering ensures a wide range of perspectives, reference points and ideological leanings.

All of it was underpinning a far-reaching exchange of ideas, even for the business-focused stream of the B20.

Several senior business leaders advocated directly and energetically for ratification of the WTO Trade Facilitation Agreement, and WTO Director General Azevedo, also a promoter of the importance of trade financing (as shown in his remarks at the Conference for Financing and Development in Addis Ababa last July) invited business leaders to engage more directly with the WTO going forward.

The crucial role of trade in the creation of economic value, reflected in part by the growth of global GDP, was specifically addressed by OECD Secretary General Angel Gurria.

Financial and economic inclusion, as well as the importance of small business, were also recurring themes, addressed directly or through advocacy for the Trade Facilitation Agreement by delegates like Guler Sabanci, Chair, Sabanci Holdings and Sunil Bharti Mittal, Chairman and CEO, Bharti Group, and Vice Chair, International Chamber of Commerce.

The critical role of small business in underpinning economic growth was widely acknowledged, not only at the Antalya Summit, but in the year-long work of the various B20 Task Forces, and the reports and recommendations produced by each task force.

Turning ideas into action

The dialogue and deliberations of the B20 Summit touched on numerous important points, and reflected a high degree of alignment on several major business-related themes, even those with wider and more complex implications, and a focus on the tag line “Business Diplomacy at its Best”.

The Turkish Presidency explicitly sought to maintain continuity with the efforts of the B20 Australia summit in 2014, and directed task forces to focus on the generation of implementable ideas and implementation.

Even with this focus and alignment, it is understood that one of the objectives of the business stream – gaining the attention and support of the most senior political leadership of the G20 – is a very difficult task, given the many highly sensitive priorities vying for attention.

The channel is very narrow, and demands a short, focused message, even with the support of organizations like the International Chamber of Commerce and many others actively and strongly supporting such efforts.

While reaching the G20 is an important objective of the B20 (and other parallel) processes, in the end, the research, analysis and recommendations of a series of task forces with world-class chairs and knowledge partners, stands on its own merits.

The year-long work of task force members serves as an excellent global basis for the development, sharing and dissemination of transformational business policy and practices.

Preparations are already underway for the next G20 and B20 events under the Presidency of China in 2016, with the official handover completed in Antalya.

It is incumbent upon all of us, however, to ensure that the work completed over the past year becomes part of an iterative, evolving process and contributes meaningfully to doing “the best for the rest of us”.

What else does Alexander do?

Learn more about the intricacies of Trade Finance from one of the leading subject market experts on the topic. His critically acclaimed book Financing Trade and International Supply Chains will give you deeper insights into nature of trade finance at its core, and of the versatility of this discipline in enabling trade flows involving businesses of all sizes.

The post Reflections After the 2015 B20 Summit: “Do Your Best for the Rest of Us” appeared first on Trade Ready.

Sometimes, regions experience a sudden boom in their ability to generate economic success. These markets on the rise can attract a lot of economic interest and international business activity. And as such, it’s a good idea to be informed about which markets are growing.

Here are five markets that are hot and are currently on the rise…

1. India

India currently has one of the fastest growing gross domestic products in the world. Its growth rate is projected to reach 5.5% by the end of 2015

Part of the reason why this market is growing at such a fast pace is because it has a large population, and subsequently a large work force.

In 2012, India had a workforce of over 470 million people. This workforce also has extremely competitive wages, which are attractive to foreign companies looking to outsource.

Another reason why India is on the rise is because its government, under Prime Minister Narendra Modi, is creating new legislation specifically designed to increase business growth.

For example, it has altered its environmental and labor regulations and created investing incentives, all for the purpose of promoting growth.

Furthermore, India has many profitable exports such as gems, precious metals, oil, textiles, and clothing. In short, India’s economy is growing because its government and workforce are both working to promote growth in the market.

2. Indonesia

Indonesia is another country that is on the rise. The GDP of Indonesia is projected to increase by just over 5% by the end of 2015, close behind India as one of the fastest growing economies in the world.

Also similar to India, Indonesia has new government leadership that is attempting to promote growth in the region.

President Joko Widodo is trying to affect change by reducing fuel subsidies, redirecting the money into education and infrastructure. He is also considering lifting raw ore exporting bans.

Further, Indonesia has a rapidly expanding middle class and a GDP of around one trillion dollars. Both of these statistics are important when you consider that Indonesia is the fourth most populous nation in the world.

The country has over 250 million people, and if its economy keeps growing, it could cultivate an economy that is even stronger and more globally significant.

Indonesia exports oil, gas, textiles, electrical appliances, rubber, and a number of other products. These exports are in demand around the world, and help Indonesia remain a market on the rise.

3. Poland

Although many may not consider Poland to be one of the most exciting markets in Europe, its current economic growth is helping it keep pace with some of the fastest growing economies in the world. By 2016, Poland is predicted to have a GDP growth of over 3%.

Some of the key Polish exports helping fuel this growth include aircraft, oil, machinery, pumps, medical technical equipment, copper, plastics, ores and furniture. Poland exports these goods to many different countries, most notably China and the United States.

In addition to these exports, Poland is another country where the political environment is helping to fuel growth in the economy.

The Civic Platform party had been seeking to free up the business environment with more liberal policies, to increase investment by foreign companies, and to improve infrastructure.

After losing both the presidential election in May 2015 and the parliamentary elections in November 2015 to the rival Law and Justice party, however, it remains to be seen whether this trend will continue.

4. Kenya

Kenya’s 2015 GDP growth is predicted to finish even higher than India’s, at 6%. This is due in part to the political stability that President Uhuru Kenyatta has brought to the country. He and the rest of the Kenyan government have increased national security, and are planning to move forward with plans to enhance to country’s infrastructure.

Some of Kenya’s top exports are tea, coffee, apparel, iron, steel, and horticulture, including flowers. By producing these products in great quantities and with high quality, Kenya is able to be very competitive in these markets.

Kenya also has some of the best farmland in the entire African continent.

A whopping 75% of all the jobs in the country are in the agriculture industry. Tea alone contributes to 20% of the nation’s GDP.

Furthermore, Kenya is working in cooperation with some of its neighboring nations, including Rwanda, Uganda and Tanzania, to promote business and trade in the area. Businesses in Kenya continue to work on technological innovation as well, including payment systems for mobile phones, which will support the country’s rising consumer base.

5. China

The Chinese market has been growing for a number of years. With a projected GDP growth rate of 7% by the end of 2015, China is the fastest growing economy in the world. There are a number of reasons why it is growing so fast.

First, as many as thirteen million Chinese people are moving from rural areas to the cities every year in order to seek higher paying jobs. This results in a work force that is making more money and generating more exports. Both of these things increase GDP.

Second, the private sector is increasing in China.

In 1978, private business accounted for only 1.2% of the total Chinese GDP. However, in 2012, it was over 60%.

Third, after the global crash of 2008, the Chinese government created an economic stimulus package of over $US 580 billion and also altered regulations to help increase bank lending. These two things helped the economy recover from the financial crisis.

China also exported over $US 2.3 trillion worth of goods in 2014. Some of its top exports include electronic equipment, such as computers, as well as clothing, machines, furniture, plastics, cars, and medical equipment. The country continues to be a manufacturing powerhouse, attracting foreign business with its competitive labor wages.

All of these factors equate to China remaining a market on the rise. Its growth over the past few decades has been remarkable, and even if that growth slows slightly, it will still be one of the most rapidly growing economies in the world.

Do any of these markets seem like a fit for your market entry strategy? What other markets are on the rise that companies looking to export should consider?

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As everyone focuses on China, which is facing daunting challenges in its excess industrial capacity, stock market crash, and efforts to shift from an export-driven economy to a consumer-based model, some developments in the region have remained largely unnoticed.

Yet, one of the newest stories on the continent is Vietnam, which is well positioned to become the region’s manufacturing and trade hub across a range of sectors. Here’s what you need to know.

Asia’s new manufacturing hub

Comparative advantages are not set in stone. The unprecedented rise in China’s labour costs, which have more than doubled since 2003, have opened an opportunity for more cost-competitive countries like Vietnam to attract investments.

According to fDi benchmark, a data service owned by the Financial Times, total operating costs for an automotive plant are now 40% lower in Vietnam than in China. In the case of manufacturing plants for biotech-pharmaceutical products or medical devices, costs can be as much as 50% lower.

As a result, investments into Vietnam have surged to US$ 8-9 billion per year over the last 5 years, up from virtually nothing two decades ago.

The number of greenfield investment projects doubled in 2014 to almost $24 billion, making it the second most popular investment destination in the Asia Pacific region, behind only China, and ahead of India, Indonesia, and Malaysia, not to mention Bangladesh and Cambodia.

For many investors, Vietnam is seen as a hedging replacement for China, particularly in the manufacturing sector, turning the country into the manufacturing hub of the region.

Big multinationals like Nike, Procter & Gamble and Unilever are expanding their activities there. While 40% of Nike shoes were produced in China in 2001, compared to 13% in Vietnam, by 2013 only 30% were still made in the Middle Kingdom, while 42% were instead produced in Vietnam.

An improved business environment

Many commentators cited cheap labour costs as playing a large role in Nike’s decision to move a good part of its production to Vietnam as its next business frontier.

This is turning a blind eye to other key factors that make Vietnam an attractive place: a young population of some 90 million people; Vietnam’s geographic position near global supply chains; a growing consumer market boosted by a solid economic growth of 5-6 % per year over the past 5 years; a relatively stable political and economic scene; and an improving business climate.

In 2015, for the first time, Vietnam ranked ahead of China in the World Bank’s Ease of Doing Business Index (in 78th position, 12 ranks ahead of China), with a significant head start on countries like the Philippines, Indonesia, and India.

With discretion and perseverance, the government is passing reforms to improve its business environment. A new investment law, effective July 1, for example, simplifies foreign investment procedures, relaxes licensing requirements, and ends the differentiation between domestic and foreign investors.

Opening the country for business

Vietnam’s government is also pursuing an active trade policy. In May, it signed two major free trade agreements, with Korea and with the Russian-led Eurasian Economic Union (EEU).

On August 4, 2015, it reached an agreement in principle for a free trade agreement with the European Union (EU), after two and a half years of intense negotiations. This landmark agreement will remove practically all tariffs on goods traded between the two economies, a first.

Never before had the EU negotiated a symmetrical liberalization of trade with a developing country.

The agreement will open Vietnam’s trade in various services sectors, including financial services, telecommunications, transport, and postal and courier services.

It will also lift or ease limitations on the manufacturing of goods and provide for government procurement rules largely in line with the Government Procurement Agreement of the WTO, “achieving a degree of transparency comparable to the other EU free trade agreements with developed countries and more advanced developing countries” as the EU Commission noted in its press release.

Few countries can pride themselves on having reached three major trade deals within just a few months.

Last but not least, Vietnam is one of the 12 countries in Asia and the Americas that recently reached an ambitious agreement to liberalize trans-pacific trade in the TPP negotiations. While unprecedented in its geographical scope, the Trans Pacific Partnership excludes some of Vietnam’s key competitors on the regional scene, in particular China and Indonesia.

One of the biggest winners of the TPP is likely to be Vietnam. A study by the Peterson Institute for International Economics estimates that Vietnam’s GDP could rise by an additional 10% by 2025, the largest percentage gain among TPP participants.

These various agreements will, no doubt, further contribute to improving Vietnam’s business environment and will reinforce its position as a manufacturing and trade hub in Asia.

Asia’s trade growth champion

In fact, a detailed look at trade figures shows that Vietnam has been Asia’s trade growth champion for some time already.

Merchandise exports have increased by nearly 20% per year over the period 2005-2013, the fastest growth rate in the region, well ahead of Bangladesh, India, Indonesia, the Philippines, and even China, whose exports of goods grew by “only” 14% per year on average.

While exports of services have grown at a slightly slower rate than others in the region, Vietnam still ranked first in 2012 in terms of growth of exports of goods and services combined.

No doubt, an economic rebalancing is at play in Asia. Discreetly, Vietnam is positioning itself as a key manufacturing and trade hub in the region. Yet, investing in and trading with Vietnam is not an easy go and requires careful analysis and planning.

The country may be ahead of China and India in terms of Ease of Doing Business, but it still lags far behind a country like Malaysia. Further reforms are needed to consolidate its position and transform its current cost advantage into one built on skills and technology.

Does Vietnam factor into your business’s international expansion plans? What would be the pros and cons of doing so?

The post Could Vietnam become both the world’s next factory and business frontier? appeared first on Trade Ready.

These markets remain an unprecedented source of economic growth across various industry sectors, and hundreds of millions of households will continue to join the ranks of the middle-class consumers in the years ahead.

According to the Monitor ICEF, while definitions and classifications of ‘emerging markets’ may vary, the general view is that the BRICS nations and a number of non-BRICS emerging markets (such as Indonesia, the Philippines, Vietnam, Mongolia, Myanmar, Nigeria, Ghana, Morocco, Turkey, and Mexico) will play a prominent role in shaping the new international trade environment.

Predicting future economic growth in emerging markets

Consider what the Monitor ICEF has to say about the growing economic power of the emerging markets:

• Between 2004 and 2013, the BRICS economies doubled in size and now collectively account for 21 percent of global GDP and 53 percent of emerging market GDP.
• Last year, emerging markets were home to 85 percent of the world’s population, and 90 percent of those under age 30. Their total population is expected to grow at three times the rate of developed economies between now and 2020.
• The BRICS countries are home to 268 million households with an income over US $10,000—a figure that is more than the US and Eurozone combined.
• Estimates from The Boston Consulting Group and the global consulting firm McKinsey & Company further predict that the middle class income group in the Association of Southeast Asian Nations (ASEAN) region will exceed 100 million people by 2020.
• McKinsey & Company has forecasted that 128 million African households will earn US $5,000 a year or more by 2020, enabling them to spend half their income on non-food items. Furthermore, Africa’s middle class families—those earning US $20,000 or more—outnumber India’s.

A shift in the central players in international trade

These powerful statistics help us better understand why the emerging markets are more important today than never before, for three main reasons:

1) Rising incomes is a real driver of emerging market economies

The Boston Consulting Group projects that in Turkey, an additional 6 million households will enter the middle and affluent classes in the next five years.

In Indonesia, they project that 68 million people—roughly equivalent to the entire population of the UK—will make a similar leap by 2020.

Thirty-seven percent of Brazil’s 60 million households will belong to the middle and affluent classes by 2020, compared with 29 percent now, and will represent a US$1.2 trillion market.

In China and India, such households will represent US$10 trillion in buying power.

2) Transformation of the emerging markets’ business ecosystems is directly affecting business models in developed countries

In most emerging markets, domestic companies with low cost structures and more advanced knowledge of local consumers are quickly improving their operations.

These young and dynamic companies are also becoming more aggressive in moving onto the world stage and in competing with the companies in the developed economies.

As emerging markets develop further, we should expect that companies based there will continue to expand their presence and compete with companies in developed countries with low-cost production.

They will be growing by invading the traditional territory of industrial countries and fine-tuning their capacity to manufacture increasingly sophisticated products and services.

3) Integration of the emerging markets’ financial institutions is reinforcing their status as central players in international trade

This new trend would allow developing countries to grow in a more financially integrated fashion and provide themselves with a competitive edge for conducting commercial operations by relying on their own financial centers and currencies.

The newly created New Development Bank operated by the BRICS states, for example, stands as an alternative to the existing US-dominated World Bank and International Monetary Fund.

How can businesses identify which emerging markets represent the best opportunities for their needs?

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