No slowdown expected in the quick rush to ASEAN market e-commerce share, after the smart moves by Alibaba and Amazon and the strategic acquisitions of retailers and e-marketplaces to establish a competitive stronghold into the local markets. We’ve been through the analysis of this strategic context earlier, and we’ve shared the strong potential of an e-sales volume that will experience a 16x growth in the next ten years.
European sales have a strong target area in the ASEAN market: it scored very good performances in 2015-16 and is one of the fast pace destinations for the Italian export (+2,3% last year) while the chart below shows an interesting trend during the last five years. Often we underestimate the overall market volume of this area: ASEAN imports more than 600 bln of euros in goods that’s equivalent to the sum of France, Spain and Portugal international demand. In Italy we scored a record increase in the first month of 2017 (okay it’s only one month but it’s quite a good proxy of the current trends) with a +57% in sales compared to the same period of 2016.
If we have a look to the most reliable forecasts of the import trends in the next years, we can be quite confident about a general increase in the international demand that could lead to a stronger investment from exporting countries into this strategic area, before our competitors acquire solid competitive advantages. There’s a strong potential that’s still not exploited by EU companies, not only because of the complexity of the market itself, but for several restrictions to services and FDI (even if Europe is the first foreign investing country with more than 19 bln euros of outgoing FDI stock). There are also relevant tariff escalation problems, with duties increased with a direct proportion with the level of post sourcing process complexity, which has a negative impact on strategic assets of EU exports.
ASEAN and the EU have been trying to finalize a wide range trade agreement for more than ten years, but the relevant differences between ASEAN countries economies slowed down the process. But there are still several European projects with the purpose of realizing a single cooperation area, as usual oriented to environment issues, human rights and rural development.
ARISE and ECAS III projects have instead a more commercial oriented purpose: ARISE has been deployed with the aim to accelerate the transition process to a single market through the convergence of technical and customs standards and the upgrade of the current logistic network while implementing a more structured capacity building process. ECAS III instead concentrates efforts on the protection of the intellectual property rights, a quite sensitive issue while dealing with ASEAN markets.
Let’s have a look, in conclusion, to an updated map of Italian export shares across the world: it shows a typical EU exporting country gap in strategic areas like China or the ASEAN countries which clearly explains the unexploited potential. It’s far more important if we consider ASEAN a good shelter from the raising winds of protectionism worldwide.
Still a lot of work to do, but the direction is clear and bright.
[header photo by Rafa Prada via Unsplash]