DMCC Future of Trade
- 2. The Impact of Digital Securing Talent Supportive Regulation Shifting Power and Influence System Efficiency Access to Funding
- 3. The Impact of Digital Mobile commerce is more important in e-commerce in many poorer parts of the world than it is in OECD economies. xxxxx xxxxxxx xxxxxx xxxxxxxxxx xxxxxxxxxxxx In the years preceding the Great Recession, global trade had been growing at about 1.5 times the rate of global Gross Domestic Product (GDP) for about four decades, meaning that the global trade-to-GDP ratio experienced an upward trend. Source: E-Marketer, World Bank, Cebr analysis 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% South Asia Latin America & the Caribbean North America Europe & Central Asia East Asia & Pacific 2013 2014 2015 2016 2017 2018 Figure 6 E-commerce sales as % of total retail sales, by region (baseline scenario)
- 4. The Impact of Digital The macroeconomic context for the digital industries The role of the development in digital technologies as the single most important phenomenon of the past two decades cannot be overstated. The impact of 3D printing The role of the development in digital technologies as the single most important phenomenon of the past two decades cannot be overstated. The value of data It has never been easier for organisations to gather and store information. 12% Of companies arounf the world use 3D printing in some capacity
- 5. The Impact of Digital DMCC/CEBR Industry Digitalisation Index Establishing the potential for digital development and the impacts of this on trade is important not only on a regional basis, but also on a sectoral one. 10.00.0 20.0 30.0 40.0 50.0 60.0 70.0 All Information and Communication Accommodation & Food Services Professional, Scientific & Technical activities Computers, electronics, machinery &... Automotive Utilities Commodities Administrative & Support Services Real estate activities Basic Manufacturing Transportation & storage Wholesale & retail trade Construction 41.7 57.4 50.5 46.3 45.2 43.7 42.5 41.9 40.4 40.0 39.3 39.1 38.5 36.3 Figure 13 Score on DMCC/Cebr Industry Digitalisation Index (IDI), by industry group (1-100, where 100 is fully digitalised) Source: Eurostat, Cebr analysis Upstream supply chain phase: This component aims to measure the extent to which businesses are digitalising their practises when it comes to connecting with external suppliers. Production phase: This component aims to measure the extent to which businesses are digitalising their practises when it comes to their internal processes. Downstream supply chain phase: This component aims to measure the extent to which businesses are digitalising their practises when it comes to connecting with their clients – be it consumers, other businesses, or governments. Digital infrastructure: This final component looks as businesses’ progress in setting up a digital infrastructure to support the digitalisation of the production phases covered in the rest of the index.
- 6. Shifting Power and Influence xxxxx xxxxxxx xxxxxx xxxxxxxxxx xxxxxxxxxxxx Many of those who attended Future Agenda discussions expressed the view that we are witnessing the end of an era in international trade. Overall western markets are weakening compared to the new opportunities from emerging economies. 70 60 50 40 30 20 10 0 USA Australia Total Europe Canada Brazil UK Russia Kazakhstan Indonesia Peru Iraq Chinese FDI to top 10 recipient countries 2005 – 2013, USD billions Source: Accenture 2014 Spurred by easy, global connectivity, individual loyalties are also changing and this is beginning to influence the way that markets react to each other.
- 7. Shifting Power and Influence Europe There is general consensus that the Euro experiment has had its day. India Many agree that in the long-run India’s demographic dividend will pay out. Russia Things are not looking good in Russia. Its population, although not ageing, is expected to decline by 10% over the next decade; it has lost access to secure water and food supplies which were previously available through its Former Soviet Union neighbors and its economy is corrupt and dominated by state or quasi-state firms whose revenues depend on political contacts rather than economic efficiency. China China continues to be a major global force, consuming a vast array of commodities including over half the world’s production of aluminium and nickel, over 40% of its copper, zinc, tin, steel and lead and more than 30% of the global cotton and rice. 40% The ammount of the world’s copper production curently consumed by China
- 8. Shifting Power and Influence 33%+ South- south trade is likely to account for over a third of global trade by 2025. Middle East There are multiple facets at play in the Middle East and wherever you go in the region there are multiple opinions. Latin America Latin America’s economy began to slow in 2011 in tandem with a gradual fall in global commodities prices. United States Lastly, and perhaps most significantly, we come to the US. Even though its reliance on international trade remains one of the lowest of any developed economy, it has been at the centre of a global trading framework since the end of the Second World War. Africa Africa as a continent has, on average, grown its economy by at 5% per annum over the last decade.
- 9. Trade Funding and Finance The most disruptive new entrants to banks and the way companies trade may prove to be the crypto- currencies, for example Bitcoin,and the associated underlying and de- centralised block- chain technology. xxxxx xxxxxxx xxxxxx xxxxxxxxxx xxxxxxxxxxxx According to IMF and WTO figures, world trade increased six-fold from 1980 to 2015 while global GDP roughly doubled. As of 2014, the EU, China and the US were the leaders accounting for 14.9%, 14.3% and 13.4% respectively, but the EU and US share of global GDP was higher at 23.9% and 22.5%. of SMEs lack clarity on the total cost of finance of SMEs turned down by banks do not consider AltFi £1.74bn £12.3bn 2020 2014 40% 70% Growth of AltFi market
- 10. Trade Funding and Finance The role of money in trade Money enables people to compare quickly and easily the value of different commodities, to easily exchange one thing for another, and to store wealth conveniently and as such is fundamental to all aspects of trade, domestic and international. The role of currencies At the same time, as money is changing in order for wider trade to flourish, there is a growing need for new forms of social interaction and ability to communicate across cultures. 500% IMF data show trade grew six-fold from 1980 to 2015 while GDP doubled
- 11. A new geography of talent Across the world it is difficult for companies to recruit the right people for the right jobs. Paradoxically many professionals can’t get work, finding themselves either with the right skills in the wrong place or with the wrong skills to cope in an increasingly technical and interconnected world. Certainly, efficiencies are being made across multiple sectors and all sorts of jobs, from accountancy to engineering to nursing, are being transformed because of the existence of robotics and computer science. xxxxx xxxxxxx xxxxxx xxxxxxxxxx xxxxxxxxxxxx Concept of a global career and the key elements that it captures ‘The value of global careers to the UK’ – a report by Cebr for L’Oreal Global career Work and / or train across international markets Work and / or train with colleagues from multiple markets Learn about product development and market practices Sabbaticals to visit international locations Work remotely in same role, from international location Work on international projects - exporting products/ services Attending training with colleagues from multiple markets
- 12. A new geography of talent Education for all For millions of people, especially the children of poor and minority families, getting more education is the best advice. Elite global nomads The privileged few, fortified by sought-after skills and protected by the passports of their choice, dominate the top echelons of the corporate world. Digital overload Many blame talent shortages on the speed of change generated by the digital economy. #1 In 2015 New York was ranked the most competitive city in the world with London second
- 13. Standards Driving Trade A good share of new international regulation is increasingly aimed at freeing up trade to make it simpler and less bureaucratic. Whether at global or regional levels, governments around the world are seeking to improve the trading landscape for the goods their country produces, some more successfully than others. With free trade areas such as the EU, NATFA and potentially both the TTP and TTIP all restricting the use of tariffs to tax international trade, alternative ways for countries to protect their own interests have gained ground. Source: UNCTAD; WTO Services Commodities Manfactured goods 25 20 15 10 5 0 1995 97 99 2001 03 05 07 09 11 13 Exports. $tn 1970 75 80 85 90 95 05 10 15*2005 300 250 200 150 100 50 0 Goods & services Goods Cumulative number of trade agreements xxxxx xxxxxxx xxxxxx xxxxxxxxxx xxxxxxxxxxxx
- 14. Regional Alternatives So, with global agreements failing to progress, the number of regional trade agreements has grown considerably - from around 70 in 1990 to more than 270 at the time of writing. Role of Non Tariff Barriers Within the global and local trade context, there has been a gradual shift away from tariffs, in developed economies but this has been coupled with the introduction of more so called ‘non tariff barriers’ such as environmental or safety standards which can, in some cases, restrict imports. Standards Driving Trade $115 The sum, per container, to be saved under customs automation
- 15. Systems Efficiency Over the next decade, as trade continues to evolve, many see significant improvements occurring in the overall efficiency of the system. At both global and regional levels, there will be enhancements that reduce waste, improve transparency and smooth the flow of goods. Supply chains have evolved into value webs that span and connect whole ecosystems of suppliers and collaborators. Simply by connecting people these webs can reduce costs, improve service levels, mitigate risk and drive innovation. xxxxx xxxxxxx xxxxxx xxxxxxxxxx xxxxxxxxxxxx 56%Supply chain visibility18%RFID transmission 42%Product traceability data 24%Temperature and product streaming 47%Geo-location and mapping data Stability to use data sources for big data opportunity Source: Supply Chain Insights 2013
- 16. Systems Efficiency Open Supply Webs It wasn’t long ago that companies sought to manage their own supply chains to optimize delivery to production facilities and then on to distributors and retailers. Autonomous Vehicles While many are excited about the impact autonomous vehicles will have on moving people, others see that it is their ability to move goods will be the real change over the next decade. 50% Of the cost of all deliveries is incured the during the last mile of the journey