Noel Quinn, HSBC Group General Manager and Regional Head of Commercial Banking Asia Pacific recently had a visit to Viet Nam, one of HSBC's important markets. He shared his knowledge about opportunities in other markets that can be tapped by businesses in Viet Nam with Viet Nam News in an exclusive interview.
What do you think about the current trade flow, globally and regionally?
Despite the slowdown in Europe there is significant growth in intra-Asia trade, also trade with Africa and Latin America. Trade flow between Asia and North America is stronger than most people expected, particularly in 2012. So trade to North America is good, Europe is slow and intra Asia is fast. Overall, Asia has experienced the growth in trade despite the world's slowdown. I also see the change within Asia which is a shift in manufacturing base from China to Asian countries and China is becoming a consumer market and moving up its value chain. That's why we see increasing export from Viet Nam, Indonesia, Malaysia, Bangladesh into China and I certainly see evidence of that in our customer base.
If you look at our research on where the world would be in 2050, that research would suggest that 19 of the world top 30 economies in 2050 would be those economies that deemed to be emerging markets today. And many of those are here in Asia: Viet Nam, Indonesia, Thailand and Malaysia. My expectation through that research is we would see a rapid growth in the economies and a change in where the world GDP would be situated. For Viet Nam, it had a very strong decade of growth. In 2012, it had a strong growth in export of 20 per cent and delivered a trade surplus for the first time since 1993 and the trend continues into Q1 as the export growth is 19 per cent, a trade surplus again.
Which are the countries that would benefit the most from this change?
|Banks help match local exporters and foreign businesses together. — File Photos
Countries benefit from the changing trade pattern include Viet Nam, Indonesia, Malaysia, Bangladesh and Thailand. Generally I think Asia has a strong future ahead of it. It's not immune from the world economy but it still manages to deliver a strong growth and part of the reason is Asia is strongly becoming a consumption market.
Within Asia, in term of trade growth and in term of opportunities for growth, Viet Nam is in the top list for the next few years. With an 88 million population, of which average age is 27, with 65 per cent of the population under 35 and hard-working people, Viet Nam has important factors to drive growth. And further, you have already developed an industrial base. You have some industries that received strong investment in the last decades: textile, garments, electronics that give you a strong platform to continue to grow from. And you have good infrastructure with investment in transportation, power that will facilitate further economic growth. So those attributes: population, industrial base and infrastructure are important ingredients.
As read in the latest Trade Connections Report about Viet Nam, it will be the key player in the global clothing and apparel market and in telecoms. Can you be more specific about this view and what would make Viet Nam standout in the rising competitive forces from other countries like Sri Lanka or Bangladesh?
I see two factors that explain Viet Nam's role in the fields. The first one is about a significant change that is happening in China and the second is about what Viet Nam is doing to turn that forecast to reality. In China, I am seeing a change in focus of manufacturing. It's not an absolute change, rather a shift in line with their 12th 5-year plan which encourages businesses and SOEs to move progressively up the value chain. Some of the lower value, labour-intensive manufacturing sectors are likely to be moved out of China, for example some of the textile manufacturing. Viet Nam stands to be a significant beneficiary. That trend continues in food ware, an industry with the most dominant shift. In addition to that, the fact that Viet Nam has been investing in infrastructure, having a young working population and very competitive wage advantage do bring up the advantages for Viet Nam. It's true that those advantages may not be as big as of other countries like Sri-Lanka, Bangladesh, or Cambodia but Viet Nam has had a relative good start ahead. Indeed, it's a big cake for everyone. If only 10 per cent of China's textile industry is shifted to Bangladesh, that would double its export market. So a small shift of China industry can have a big impact on smaller markets.
Many Vietnamese traders want to reach out to other markets, what is your advice for them? Should they focus on intra-region trade?
One of the hardest things for businesses when entering a new market is they don't know the market very well. It is about doing the research, understanding the market, understanding the people you are trading with, understanding the buyers, understanding the business partners, understanding the joint venture. Whenever we talk to businesses that are about to expand overseas, the topic is rarely about finance or products, it's typically the uncertainty about who they are doing business with.
My view is while looking at where you know best and what is close to your understanding, look at where the opportunity is. For me, Asia is close and Asia presents the opportunity. While we should not close eyes on all the opportunities elsewhere, clearly an over-expansion could be a problem as well.
What should Viet Nam traders expect from an international bank like HSBC in supporting them to reach out to overseas markets?
Trade is always at our core. As one of the world's leading international banks, our network covers 85 percent of the world trade markets. Which means when it comes to mostly any overseas market that Vietnamese traders want to explore, HSBC has people on the ground to support them. In Viet Nam we have a special trade team that is designed only to support our customers in Viet Nam to growth their trade businesses. We talk to local exporters to know where their markets would be and we talk to foreign businesses to see if there are opportunities and match two sides together. We frequently hold international trade events where we bring together our customers from around the globe not only to connect them to each other but also to connect them to opportunities arising in new potential markets. For example, we invited Viet Nam's traders to our biggest trade event last year in Brazil and this year in Singapore, Shanghai…to present to them not only the trade trends, trade opportunities in the world's busiest trade hubs but also potential trade partners around the world. — VNS