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Asia’s Beef Market 2020 – Positive Outlook for China, Negative Expectations for India

asia

Asia’s Beef Market 2020 – Positive Outlook for China, Negative Expectations for India

IndexBox has just published a new report: ‘Asia – Beef (Cattle Meat) – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The coronavirus pandemic continues to negatively impact the Asian beef market, holding back production and international trade. However, it can be predicted that the strength of the impact will depend on how quickly countries return to normalcy. In China, which was the first to recover from the pandemic, positive dynamics are expected in the second half of the year. In contrast, India, the second-largest beef producer after China, will face significant losses in production and exports.

The expected increase in China’s beef production is driven by rising cattle herds, particularly on large farms, and strong domestic demand to offset the ongoing pork shortage. In addition, China will continue to increase its imports, fueled by new accreditations granted to meatpacking plants in Brazil, Argentina, and Uruguay, as well as new trade agreements with these countries.

In India, cattle production may be reduced due to a pandemic shutdown, especially since collection of animals is usually carried out in the form of home visits. Given that most of the production is destined for foreign markets, slowing economic growth in many countries could further undermine the Indian cattle sector.

Import growth is likely to slow in almost all other Asian markets, as widespread recession restricts consumption in middle- and low-income households, while restrictions and physical distancing reduce restaurant turnover, dampening demand for high-quality meat products.

Beef Consumption by Country in Asia

China (7.5M tonnes) continues to be the largest cattle meat market in Asia, accounting for 35% of the total volume. Moreover, beef consumption in China exceeded the figures recorded by the second-largest consumer, Pakistan (1.9M tonnes), fourfold. India (1.5M tonnes) ranked third in terms of total consumption with a 7.1% share.

From 2009 to 2019, the average annual growth rate of beef consumption in Сhina was +1.5%. Pakistan enjoys the highest growth (+3.2% per year), while India suffers from decreasing demand (-2.8% per year).

In value terms, China ($93.3B) led the market, alone. The second position in the ranking was occupied by Turkey ($7.5B). It was followed by Pakistan.

The countries with the highest levels of beef per capita consumption in 2019 were Uzbekistan (29 kg per person), Kazakhstan (27 kg per person), and South Korea (14 kg per person).

From 2009 to 2019, the biggest increases were in Turkey, while beef per capita consumption for the other leaders experienced more modest paces of growth.

Production in Asia

In 2019, Asia’s production of cattle meat expanded modestly to 19M tonnes, with an increase of 2% on the previous year’s figure. The total output volume increased at an average annual rate of +1.7% from 2009 to 2019; the trend pattern remained consistent, with only minor fluctuations throughout the analyzed period. The pace of growth appeared the most rapid in 2010 when the production volume increased by 3.8% y-o-y. Over the period under review, production reached the peak volume in 2019 and is likely to continue growing in the immediate term. The generally positive trend in terms output was largely conditioned by a mild increase in the number of producing animals and a relatively flat trend pattern in yield figures.

Production by Country in Asia

China (6.5M tonnes) is the largest cattle meat producer in the region, accounting for 34% of the total output. Moreover, beef production in China exceeded the figures recorded by the second-largest producer, India (2.6M tonnes), twofold. Pakistan (2M tonnes) ranked third in terms of total production with an 11% share.

In China, beef production was relatively stable over the past decade. The remaining producing countries recorded the following average annual rates of production growth: India (+0.6% per year) and Pakistan (+3.4% per year).

Producing Animals in Asia

In 2019, the number of animals slaughtered for beef production in Asia reached 116M heads, standing approx. at 2018. This number increased at an average annual rate of +1.1% from 2009 to 2019. The pace of growth appeared the most rapid in 2010 when the number of producing animals increased by 2.9% year-to-year. Over the period under review, this number hit record highs in 2019 and is expected to retain growth in the near future.

Exports in Asia

In 2019, the amount of cattle meat exported in Asia totaled 1.3M tonnes, approximately equating 2018. In general, exports continue to indicate a prominent expansion. The most prominent rate of growth was recorded in 2011 when exports increased by 67% against the previous year. Over the period under review, exports hit record highs at 1.7M tonnes in 2013; however, from 2014 to 2019, exports remained at a lower figure.

In value terms, beef exports declined to $4.1B (IndexBox estimates) in 2019.

Exports by Country

India dominates beef trade, accounting for 1.1M tonnes, which was near 85% of total Asian exports in 2019. Hong Kong (84K tonnes) held a 6.6% share (based on tonnes) of total exports, which put it in second place, followed by Pakistan (4.5%).

From 2009 to 2019, the average annual rates of growth with regard to beef exports from India stood at +9.5%. At the same time, Pakistan (+9.8%) and Hong Kong  (+8.1%) displayed positive paces of growth. Moreover, Pakistan emerged as the fastest-growing exporter exported in Asia, with a CAGR of +9.8% from 2009-2019. While the share of India (+51 p.p.), Hong Kong  (+3.6 p.p.) and Pakistan (+2.8 p.p.) increased significantly, the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, India ($3.1B) remains the largest beef supplier in Asia, comprising 77% of total exports. The second position in the ranking was occupied by Hong Kong  ($289M), with a 7.1% share of total exports.

In India, beef exports expanded at an average annual rate of +12.0% over the period from 2009-2019. The remaining exporting countries recorded the following average annual rates of export growth: Hong Kong  (+10.9% per year) and Pakistan (+15.2% per year).

Export Prices by Country

The beef export price in Asia stood at $3,158 per tonne in 2019, falling by -4.5% against the previous year. Over the period from 2009 to 2019, it increased at an average annual rate of +2.6%. The most prominent rate of growth was recorded in 2011 when the export price increased by 21% year-to-year. The level of export peaked at $3,306 per tonne in 2018 and then shrank in the following year.

Average prices varied somewhat amongst the major exporting countries. In 2019, the country with the highest price was Pakistan ($3,815 per tonne), while India ($2,831 per tonne) was amongst the lowest.

From 2009 to 2019, the most notable rate of growth in terms of prices was attained by Pakistan, while the other leaders experienced more modest paces of growth.

Imports in Asia

In 2019, purchases abroad of cattle meat decreased by -12.7% to 3.9M tonnes for the first time since 2008, thus ending a ten-year rising trend.

In value terms, beef imports contracted to $19.9B (IndexBox estimates) in 2019. In general, imports, however, enjoyed prominent growth. The most prominent rate of growth was recorded in 2010 when imports increased by 22% y-o-y. Over the period under review, imports attained the maximum at $21.3B in 2018 and then shrank in the following year.

Imports by Country

In 2019, China (1.1M tonnes), distantly followed by Japan (617K tonnes), South Korea (444K tonnes), and Hong Kong  (365K tonnes) were the major importers of cattle meat, together committing 63% of total imports. The following importers – Malaysia (147K tonnes), Indonesia (141K tonnes), Taiwan (137K tonnes), the United Arab Emirates (133K tonnes), the Philippines (125K tonnes), Iran (119K tonnes), Israel (114K tonnes) and Saudi Arabia (86K tonnes) – together made up 25% of total imports.

From 2009 to 2019, the biggest increases were in China, while purchases for the other leaders experienced more modest paces of growth.

In value terms, the largest beef importing markets in Asia were China ($5B), Japan ($3.5B), and South Korea ($2.9B), with a combined 57% share of total imports.

Import Prices by Country

The beef import price in Asia stood at $5,039 per tonne in 2019, rising by 6.9% against the previous year.

Prices varied noticeably by the country of destination; the country with the highest price was Taiwan ($7,898 per tonne), while Malaysia ($3,172 per tonne) was amongst the lowest.

From 2009 to 2019, the most notable rate of growth in terms of prices was attained by South Korea, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

wto

AMERICAN DOUBTS ABOUT THE WTO ARE GROWING LIKE WEEDS

Polls show that Americans are concerned about the rise of China and what it means for the U.S. economy and global standing.

U.S. leadership in the WTO could serve as a valuable counterbalance to China’s growing influence. But first, Americans need to know why they should care about the WTO.

The jungle is growing back

In The Jungle Grows Back, foreign policy scholar Robert Kagan cautions that the past seven-plus decades of relative free trade and expanding individual freedoms were not inevitable and may be “a great historical aberration” – the jungle grows back.

The World Trade Organization (WTO) was sown from the seeds of democratic, free-market ideals. But China’s state-directed economic approach has growing influence and WTO members have been unable to cultivate modern trade deals to counter it.

Meanwhile, new TradeVistas polling shows Americans are mostly unaware the WTO – which represents the U.S.‘ own free-market principles – has reached this pivotal moment. The WTO’s detractors are free to plant doubts that, left untended, will grow like weeds.

Two-thirds of Americans are ready or open to the idea of leaving the WTO

Presented in detail in our companion article, Do Americans Want the U.S. to Leave the WTO?a TradeVistas poll conducted earlier this month finds that most Americans either support leaving the WTO or feel “indifferent” or “unsure” about whether to withdraw from the organization.

It’s not that Americans are necessarily focused inward, though COVID-19 has stimulated concerns about the extent of America’s reliance on global value chains. Rather, TradeVistas’ poll finds that Americans overwhelmingly want the United States to be “leader of the global economy”. They just don’t see membership in the WTO as critical to that goal.

leave WTO

What should we learn from these results?

While it might be tempting for trade policymakers to concentrate on converting the vocal minority that supports U.S. withdrawal, two undercurrents in the poll results merit close attention.

First, the subset of strong WTO opponents is substantially outnumbered by those whose views are less strongly held, and the consequences of such indifference should not be ignored. The old adage, “you don’t know what you’ve got until it’s gone,” doesn’t necessarily apply to trade institutions. Recall that when President Trump withdrew from the Transpacific Partnership Agreement on day three of his presidency, polls at the time demonstrated that 72 percent had either not heard about the TPP or “not much”. Are they remorseful now? Generally, no, despite the concerns from industry and the trade policy community. As for President Trump, the political gains from withdrawal were minimal, but neither was there a backlash.

Second, asked whether WTO rules help U.S. companies compete on fair terms or help prevent foreign governments from applying unfair requirements to U.S. companies, a clear majority – even those who strongly supported leaving the WTO — felt it was likely true that the WTO accomplishes those goals. With deeper knowledge and greater understanding of what the global trading rules offer American creators, producers and service providers, Americans may be more inclined to support the WTO, or at least support the WTO’s set of agreements, which they perceive to benefit the overall economy.

Restatement of WTO Q on Rules and Unfair Requirements

Engaging Americans on what’s at stake

Unsurprisingly, a survey by the Pew Research Center this spring found that nearly two-thirds of Americans now have a negative opinion of China. And 9 in 10 Americans see Chinese power and influence as a threat to the United States. Where there’s much less agreement, however, is how the United States should manage its relationship with China, including on trade. All too often overlooked in these discussions is the WTO – an institution whose purpose is to set the rules for global trade and through which the United States could exert its influence to restrain the commercial and economic practices it finds damaging.

In our absence, China is seizing that opportunity. If the United States spent decades building an international system in the likeness of its free-market democracy, China is actively working to remake that system in its own image. China now heads the International Civil Aviation Organization, the International Telecommunications Union, the Food and Agriculture Organization and the United Nations Industrial Development Organization. China recently ran a candidate to lead the World Intellectual Property Organization but the United States led a coalition to oppose it.

And what of the WTO’s majority of developing country members? What is the significance of Afghanistan and Liberia choosing to join the WTO, of Belarus, Iraq, and Timor-Leste in the queue? These are conflict-affected nations that seek to rebuild their post-conflict economies. They see WTO membership as a step toward necessary but difficult economic reforms at home – reforms they hope will reap economic gains that will bring more lasting security and stability. As was originally envisioned, American leadership in the WTO enables the United States to gain from trade while supporting democratic transitions and the expansion of prosperity around the world.

China is making significant infrastructure and financial investments around the world, drawing fragile democracies into their ambit. Americans would understand if the WTO were positioned as a way to counter China’s growing economic influence in the developing world.

How trade policymakers can position the WTO as more relevant to ordinary Americans

The global trade policy community mostly agrees the WTO is in need of reforms to restore its core functions of negotiating trade-liberalizing deals and ensuring effective implementation and enforcement of those trade deals.

Let’s be honest, however. Though vital for the health of the WTO, the average American is not interested in the minutia of tweaks to the WTO’s dispute settlement system, in the vernacular “special and differential treatment” for developing countries, or the definition of a market economy. When the trade community is too focused on those details, it risks losing sight of the broader need to attract American public support for the institution itself.

To position the WTO’s role more prominently in Americans’ understanding, trade policymakers should appeal to citizens in the following ways:

To Americans’ sense of fairness:

The average American is interested in basic fairness and in ensuring that major economies play by the same rules. Before the WTO, countries that signed onto its predecessor, the General Agreement on Tariffs and Trade, were called Contracting Parties. The GATT was a contract. Americans like contracts; we are good at writing contracts. We enter them voluntarily when the terms are favorable and mutually agreeable.

The United States negotiated favorable terms under the GATT and then the WTO. If those terms no longer serve the United States well, it can negotiate different or additional terms. But the United States can only do that if it remains a member.

To Americans’ need for control over their own destiny:

The average American feels conflicted about international organizations because they fear a loss of sovereignty. However, WTO rules do not prevent national policies to promote domestic jobs and growth. Rather, the disciplines of the global trading system compel governments to adhere to the norms of transparency and non-discrimination as those policies are developed and implemented.

If the American public perceives the U.S. government has made poor policy choices, that’s on our policymakers, not the WTO. And if we fail to treat companies from other nations in a non-discriminatory manner, we can be sued in the WTO just as we can sue other governments. But: only our elected representatives in Congress can change our laws. It would be helpful for more Americans to understand this.

To Americans’ desire to be left alone:

TradeVistas’ polling affirms that Americans feel contradictory impulses when it comes to their world view. This is nothing new. Americans have shown tremendous generosity when it comes to protecting other nations, but that does not mean most Americans think it is (or should be) our role. Many Americans believe others in the world deserve fundamental economic freedoms, but often feel we should mind our own business. Americans built many of the international institutions that exist, but today exert relatively little influence over them and often feel threatened by them. We’d prefer to be left alone.

Counterintuitively, the global trading rules and the WTO itself mesh well with this approach. As an extension of the American ideals of free-market democracy, the global trading rules are designed to protect individual economic freedoms, not to constrain them. Though governments are its members, the rules are designed to keep government as much out of the way of individuals and companies as possible – to let them thrive under regulations that are no more trade restrictive than necessary. The rules are accepted because most other nations in the world are also aligned with a free-market orientation.

The global trade rules are a scaffolding around a building that rests on the foundations of free-market democratic ideals. Leadership by America and its allies are what holds that building up – not the rules themselves. We are free to hold contradictory views but we have much to risk by acting in contradictory ways. In other words, it’s not enough to support the rules, we have to fight for them. Otherwise, the jungle grows back.

Q on US leader of global economy

To Americans’ concerns about China:

The United States and like-minded nations are the individual bricks in the edifice of free-market democracy. Beyond our own internal disagreements, Americans generally agree that China stands for something else.

Here again, author Robert Kagan cautions:

“History shows that world orders, including our own, are transient. They rise and fall. And the institutions they erected, the beliefs that guided them, and the “norms” that shaped the relations among nations within them—they fall, too. Every international order in history has reflected the beliefs and interests of its strongest powers, and every international order has changed when power shifted to others with different beliefs and interests.”

There is certainly room for criticism that China has “gamed the WTO system,” or that the current global trade rules are insufficient to prevent China from gaining an unfair advantage in global markets where American companies compete. Americans could be convinced that other WTO members share this concern and are willing to follow an American lead to preserve the benefits of the global trading system. More compelling perhaps, is to show them that U.S. withdrawal from the WTO serves China’s interests more than it does ours.

Tend to weeds now before the jungle grows back

Right now, the WTO appears a garden that has not been properly tended. Weeds are growing where they are not wanted.

My former colleague and WTO negotiator Mark Linscott recently wrote, “The drift and malaise in the WTO has been a collective failure [by its members] over a number of years,” attributable to “a lack of leadership, a frequent resort to entrenched bad habits, particularly in pitting the developing world against the developed one, engaging in action-numbing group think, and [failure] to find creative ways to achieve breakthroughs.”

If we continue this way, it will soon become hard to discern the roots of our intentional plantings from those of the weeds as they became intertwined. After all, there is no “weed” in nature – weeds are the state of nature.

What Mark describes is the default that WTO members must fight against. And if the WTO is to endure, we must also compel the American public to fight against its own default – a lack of awareness and indifference.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fifteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

phase one

Trade Secret Protection in China After the US-China Phase One Trade Deal

The US-China Phase One trade deal, signed in January 2020, was viewed by many as a game-changer in causing China to upgrade its enforcement regime against trade secret misappropriation. But how much impact will the deal actually have for US companies trying to prevent trade secret theft in China? As this article explains, while there will likely be an impact, it may be less consequential than anticipated.

The Phase One Agreement’s Trade Secret Provisions

The Phase One Agreement contains a number of provisions aimed at protection of trade secrets and effective enforcement against misappropriation. Although the Agreement’s requirements are bilateral, they mainly consist of obligations by China to take certain steps to enhance its trade secret protection laws to match existing U.S. laws. These steps include enumerating acts of misappropriation to include electronic intrusions, breach of duties not to disclose information that is secret, and unauthorized disclosure or use that occurs after acquisition of a trade secret. The Agreement also calls for burden-shifting in civil proceedings so that “the burden of production of evidence or burden of proof … shifts to the accused party … where the holder of a trade secret has produced prima facie evidence … of a reasonable indication of trade secret misappropriation ….”  Additionally, the Agreement dictates that China provide for prompt and effective provisional measures to prevent the use of misappropriated trade secrets, and identify use or attempted use of claimed trade secret information as an “urgent situation” authorizing judicial authorities to grant preliminary injunctions. Finally, the Agreement requires China to broaden the scope of trade secret cases where criminal liability may ensue.

Comparison to Current Trade Secret Protection Laws in China

China is a civil law country. The laws governing trade secrets are mainly provided in the Anti Unfair Competition Law, with the remaining authority provided in the Civil Law, the Criminal Law, the Labor Law and judicial interpretations issued by the Supreme People’s Court (the “SPC”). The latest amendment of the Anti-Unfair Competition Law in 2019 has already accomplished some steps required by the Agreement, such as the aforementioned expanded list of misappropriation acts and the burden-shifting rule. Similarly, for provisional remedies, a 2018 notice by the SPC provided guidance to all courts on what circumstances constitute “urgent situations” that should merit applications for preliminary injunctions; while the “urgent situations” were not expressly defined at that time to include use or attempted use of claimed trade secret information, when broadly interpreted, they would cover this situation. For these reasons, what US companies now should monitor is how effectively the laws are applied to protect trade secrets.

One of the major difficulties US companies face when enforcing their trade secret rights in China, is obtaining sufficient admissible evidence to prove both misappropriation and damages. This is especially true when the trade secret theft has cross-border elements, whereby the trade secrets are afterwards used in China, e.g. by third parties who are not obviously connected with the perpetrator.

According to China’s Civil Procedure Law, there are eight types of evidence, including statements, documentary evidence, physical evidence, audio-visual materials, electronic data, witness testimonies, court expert opinions and inspection records. However, in practice, documentary evidence is given almost total supremacy over the other types of evidence. This means that, in practice, witness statements and cross-examinations of witnesses carry less evidentiary weight. The prioritization of documentary evidence by China’s courts presents challenges for US companies seeking to use testimony or other non-documentary evidence available in the US to establish in Chinese civil proceedings that the trade secrets being used in China originated from the US (likely via an ex-employee’s breach of confidentiality duties).

Moreover, Chinese law does not provide for discovery procedures. This means that the defendant is not obliged to produce unfavorable evidence at the request of the plaintiff. At the time of filing the claim, the plaintiff must, by and large, submit (documentary) evidence to prove the facts it relies upon, and it must generally locate and produce such evidence on its own. The absence of discovery, as well as the additional formal requirements for receipt of foreign evidence, can make it challenging for trade secret holders to meet their burden of proof.

When facing these challenges, US trade secret holders should proactively think about how to collect necessary evidence cross-border so that they can support filing of a civil claim in China and ultimately stop further leakage or use of the trade secrets. This may involve collecting initial evidence of misappropriation from the US, and then using the US evidence to plead in China for a court investigation order or an order to search and preserve evidence from the defendant. The trade secret holder can leverage its pleading and the investigation and preservation orders, combined with the burden-shifting rule, to prevail on its civil claim.

Apart from civil claims, US IP owners may request that China’s law enforcement agencies pursue criminal liability for perpetrators in trade secret misappropriation cases. The Phase One Agreement calls for China to lower its threshold for initiating a criminal investigation of trade secret theft, including eliminating any requirement that a trade secret holder must establish actual losses as a prerequisite to such an investigation.

At present, Article 219 of the PRC Criminal Law stipulates that whoever commits illegal acts of infringing on trade secrets and thus causes “serious” or “exceptionally serious” losses shall be subject to criminal liability.  Under the Regulations on Prosecution Standards for Economic Crimes of the Supreme People’s Procutorate and the Ministry of Public Security, losses of more than 500,000 yuan can trigger a criminal investigation. However, there are different views from local enforcement agencies on whether the losses should be limited to actual losses and how a trade secret holder should prove its losses. The current prevailing view is that the losses should not include anticipated losses such as reduced market share or loss of competitiveness. Such a narrow reading of losses as a criminal enforcement threshold contributes to insufficient protection of trade secret rights. As an example, for trade secret theft cases involving production know-how, it is difficult to show actual losses when the culprit has started to use the know-how to build a plant or prepare to make products, but it has not yet sold the violative products.

If the Criminal Law is amended to eliminate the requirement of establishing actual losses, this will address a current problem and improve trade secret protection in China.

Conclusions and Alternatives

The Phase One Agreement undoubtedly will enhance some aspects of civil and criminal trade secret protection laws in China.  Ultimately, however, the degree of success of these efforts may depend more on the commitment by China’s courts to reliably implement and enforce these laws.

One final note for US companies to consider is that trade secret enforcement alternatives may be available in US federal courts, even for acts of misappropriation in China. Specifically, the Defend Trade Secrets Act of 2016 applies to misappropriation outside the US if “an act in furtherance of the offense was committed in the [US].”  18 U.S.C. § 1837. Such “act[s] in furtherance of the offense,” that would enable a US court to adjudicate misappropriation in China, might be as straightforward as selling or marketing imported products within the US that incorporate the stolen trade secrets.

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Zhen Feng (also known as Katie Feng) is a partner based in Hogan Lovells Shanghai IP Agency.  She specializes in all areas of IP with a focus on IP litigation, IP strategic counseling and brand protection. She advises numerous clients from diverse backgrounds on formulation and implementation of IP enforcement strategies in China through a combination of administrative, civil and criminal actions. Katie has been recognized by several industry publications as a leading IP lawyer in China, such as Top 250 Women in IP 2020 by IP Stars, Top 100 Women in Litigation by Benchmark Litigation Asia-Pacific 2020 and Recommended Individual for Litigation by IAM Patent 1000 2020. She can be contacted at +862161223826 4032 or by email zhen.feng@hoganlovells.com or by wechat account: zhenkatiefeng_wechat

Steve Levitan is co-chair of Hogan Lovells’ global trade secret group. He has led numerous intellectual property lawsuits, with an emphasis on trade secret, patent, trademark and technology contract disputes. He practices before US federal district and appellate courts, California state courts, the US International Trade Commission (ITC), and in International Chamber of Commerce (ICC) and American Arbitration Association (AAA) arbitrations. He also regularly counsels clients on the protection of trade secrets and confidential information. He is based in Hogan Lovells’ Silicon Valley, California office, and can be contacted at +1 (650) 463 4032 or by email: steve.levitan@hoganlovells.com.

 

fireworks

DESPITE TRADE TENSIONS FIREWORKS EXPORTS FROM CHINA ARE BOOMING

Liuyang, China: Birthplace and Epicenter of Fireworks Production

Many historians credit the Chinese in ancient Liuyang with creating the first natural firecracker around 200 B.C. Roasting bamboo caused it to explode due to its hollow air pockets. The noise it generated was said to ward off evil spirits. Some 800 to 1,000 years later, Chinese alchemists mixed saltpeter, charcoal, sulfur and other ingredients to discover an early form of gunpowder. When they stuffed that mixture into bamboo shoots and threw them into a fire, boom – the first “modern” fireworks were born.

Capitalizing on its pedigree of two centuries of fireworks production, Liuyang has focused its economy on becoming the undisputed fireworks capital of the world. Overall, China produces some 90 percent of the world’s fireworks. Around 60 percent of those are made in Liuyang.

Global Fireworks Exports in 2017

Potential Powder Keg: Mr. Ding’s Dynasty

Whether you bought a multipack of screamers, bottle rockets, and roman candles from a roadside stand, or plan to watch a professionally-designed community display this Fourth of July, chances are the fireworks themselves were produced in China. In 2016, the United States imported $307.8 million worth of fireworks. Nearly all, $296.2 million worth, came from China. U.S. consumers purchase about half of the pyrotechnics China exports globally.

That may not be very surprising when you consider the abundant use of pyrotechnics at American events and celebrations. “Thunder Over Louisville” is an annual event that blasts through 60 tons of fireworks in 30 minutes.

What might be concerning, however, is the discovery by a Washington Post investigative team that around 70 percent of all Chinese fireworks entering the United States are produced, warehoused, transported, and ultimately imported under the control of companies owned by just one Chinese businessman, Ding Yan Zhong. The reporters estimate that Mr. Ding’s companies have imported 7,400 containers, 241 million pounds, of fireworks so far this year. Of the 108 containers that arrive on average every day, 72 are controlled by Mr. Ding.

Another Example of China on the Smile Curve?

There is a brighter side for the American fireworks industry. While there’s practically no firework manufacturing left in the United States, jobs in and around the fireworks industry follow a familiar pattern where the lower-skilled work is performed in China and other, higher value-added jobs can be found occupied by Americans. Here are some examples.

Pyrotechnic engineers are trained chemists who deploy their knowledge of how certain compounds react with other inputs to create bigger, brighter, and more exciting pyrotechnics. We love the classic chrysanthemum, peonies, and willow fireworks that send bright stars scattering into arcing trails. But we also await each Fourth of July the new patterns and colors these engineers have dreamed up.

The mean salary for a U.S.-based chemical engineer in 2015 was $103,960. Contrast this job with a firework maker in Liuyang, China, where most fireworks are still made by hand, by women for a mere $80-285 a month depending on skill level. It’s not just low paying; it’s dangerous work. According to a Slate article, Wang Haoshui, chief engineer with China’s State Administration of Workplace Safety, told a Chinese newspaper that only coal mining was considered a more dangerous occupation in China.

Today China produces 90% of the world’s fireworks.

In more desirable parts of the fireworks ecosystem, American show producers spend their days “choreographing” pyrotechnic displays for large scale events in sports arenas (Super Bowl halftime show and the Olympics) and concert venues (Kiss and Mötley Crüe). Winco Fireworks in Prairie Village, Kansas, imports and distributes fireworks but also innovates electrical firing systems. The company just launched the FireFly firing system that allows backyard enthusiasts to sync their music using Bluetooth® technology while detonating their fireworks wirelessly. Enthusiasts turned entrepreneurs are also common in the American fireworks industry. Scott Smith is one such example. He’s an electrical and computer systems engineer from Ganesvoort in upstate New York and founded COBRA, a company that creates software for designing fireworks shows.

Growth is Explosive in China

As with so many other consumer products, demand for fireworks is growing so rapidly in China that Liuyang manufacturers are turning their attention inward. China’s Spring Festival and lunar New Year celebrations offer healthy competition to demand for fireworks at American Fourth of July parties.

Chinese manufacturers also say it’s getting harder to export due to strict U.S. requirements. The U.S. American Tobacco and Firearms agency (ATF) requires “anyone in the business of importing, manufacturing, dealing in, or otherwise receiving display fireworks” to first obtain a Federal explosives license or permit from ATF for the specific activity. Firecrackers sold to the American public can only have 50 milligrams or less of pyrotechnic composition per firecracker.

China’s regulations are more permissive, not simply as they pertain to manufacturing, but also with respect to the power consumer fireworks can pack. Fireworks available for purchase can be several times more potent than fireworks that have been banned in the United States.

US fireworks consumption

Trade Ensures the Continuation of an American Tradition

The first American fireworks display is said to have taken place in Jamestown in 1608. According to historians, John Adams wrote a letter to his wife on July 3, 1776 in which he predicted that the Fourth of July, the day on which the Continental Congress adopted the Declaration of Independence, would be “the most memorable in the history of America… celebrated by succeeding generations as the great anniversary festival.”

He went on to suggest the commemorations “be solemnized with pomp and parade…and illuminations [fireworks]…from one end of this continent to the other, from this time forward forevermore.” Wherever and with whomever you enjoy those colorful bursts in the night sky, celebrate this symbol of American independence and also the economic dynamism we currently enjoy thanks to our role in the global economy.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fifteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

ASEAN

Global Trade Talk: Navigating Geopolitical Currents in a Changing Southeast Asia

Global Trade Talk is part of an ongoing series highlighting international business, trade, investment, and site location issues and opportunities. This article focuses on the conversation between Simon Tay, Chairman of the Singapore Institute of International Affairs and Keith Rabin, President, KWR International, Inc.

Hello Simon. How have you been? Before we begin can you tell our readers about your background and current activities?

I am Chairman of the Singapore Institute of International Affairs (SIIA). We focus on the Association of Southeast Asian Nations (ASEAN), a regional organization comprised of ten countries in Southeast Asia, as well as the wider Asia Pacific and Singapore’s role as a hub for trade and investment and greater integration in the region. This includes a range of geopolitical issues including the rise of China, the role of the US, and most recently the coronavirus pandemic, which is serving as an accelerator for changes that have been occurring over the last decade.

Professionally, I am an attorney and was a member of Parliament from 1997-2001, serving during the Asian financial crisis. Then during the 2008 global financial crisis, I was stationed in New York at the Asia Society where we first met. These experiences have given me a unique perspective on the impact of globalization and other trends we have experienced over the past two decades.

While ASEAN currently possesses the third-largest economy in the Indo-Pacific and fifth largest in the world, many foreigners have never even heard of the regional group nor do they recognize its potential. Can you talk about how ASEAN evolved, what it represents as a commercial market and investment destination, and in terms of security and its global importance? What opportunities and obstacles and investment themes are of particular importance to foreign companies and investors in the coming years?

I don’t blame people for not knowing ASEAN. When one looks to Asia, one’s eyes are first drawn to the giants. China in particular has done very well over the past twenty years and no country has grown faster during that time. As it developed and labor costs and standards of living rose, Southeast Asia began to capture the attention of businesses, and deservedly so. ASEAN now has growing appeal, because of greater integration as we create an ASEAN Community with increased consumption and growth. That is why many people refer to us as the fifth largest economy in the world.

The reality, however, is a bit short of that – as we are not really one country or one system. We are, however, working to realize the “ASEAN 2025 Vision.” This is a roadmap adopted in 2015 to articulate regional goals to create a more cohesive ASEAN Community. SIIA is currently working on the ASEAN mid-term review, which is examining our progress, and how crises such as the pandemic can strengthen our will to more fully integrate. While an unfinished project, given the diversity in the region, it is — in some ways — every bit as ambitious as the establishment of the European Union (EU). The trend is toward closer integration.

Before the Asian financial crisis, which began in the summer of 1997, the region was mostly viewed, at least in the US, through the lens of the Vietnam War. Over the last twenty+ years we have advanced, however, and growth in ASEAN has been reinforced. This is true both in developed countries such as Singapore and Thailand, developing nations such as Vietnam and Myanmar, and those in between. Before the pandemic, ASEAN as a whole was growing at a faster rate than China. While the pandemic is hitting our people and economies hard, the region should still outperform the world.

The fundamentals are real. ASEAN is ascending from a lower base, leaving substantial room for further growth. There are many opportunities as countries raise consumption and leapfrog using software, digital innovation, and a greater online presence. Diverse sectors can do well, including labor-intensive manufacturing, infrastructure, services, consumer markets, and others that are part of the new economy.

As you note many people view ASEAN as being similar to the EU, a vehicle grouping together a group of countries into a more integrated market, though without a common currency. Is that fair and can you talk about both the diversity of ASEAN as well as the steps being taken to link these ten nations into a more cohesive entity? Is it possible for companies to have an “ASEAN strategy” or should they be looking at individual markets?

Given what I said about ASEAN, and how it is not yet a cohesive union, that is a very good question. The answer is yes and yes. Movement toward greater integration is very clear but we are not like China or the EU where you can put up one office and that’s it for the region. In a way, this is an economic strength as well as a political challenge.

In ASEAN you have an opportunity to link supply chains from a hub like Singapore, which offers first-class amenities, to less developed markets with eager and driven populations rising out of poverty and looking for jobs in factories and a more modern lifestyle. Myanmar for example is a sizable country with a pool of young people looking for jobs and a government seeking to develop. Myanmar also has a sizable expatriate population that has lived and worked in countries such as Singapore and Thailand, as well as Australia, Europe and the US, where they received education and training. Now their economies are opening – and they are returning with capacity, experience and ideas to implement change. So these countries are not starting from zero.

In between, you have countries such as Vietnam, Thailand, Malaysia and Indonesia. Labor there remains hungry for work, the land is relatively cheap and demand is growing. Today, a lot of attention is focused on Vietnam in particular. This is a country of almost 100 million young, dynamic, and hard-working people, which is well on its way to becoming a competitive supply base for many products.

ASEAN also benefits from not being China. Our diversity offers a decentralized model that adds diversification to global supply chains. It can be more complex to work across ASEAN — there is no one President or government to go to – but it is also less risky for those who can manage across borders – as it is not a case where if one government or economy fails, then the investor also fails. Moreover, ASEAN is not a threat to anyone politically. Vietnam for example has a trade surplus with the US whereas Singapore has a deficit.

Those who invest in ASEAN benefit from having an alternative to China, though are still located in this growing region. This allows synergies with production clusters based there. Being in ASEAN allows companies and investors to benefit and participate in this growing regional economy without putting more eggs into the China basket.

You mentioned the US has enjoyed strong ties with ASEAN since its birth in 1967. This was a time when the US sought to develop regional allies in the face of the Vietnam and Cold Wars. Today, however, despite a move to initiate an “Asian Pivot” under the Obama administration and talk of the “Indo-Pacific” under President Trump, some question US commitment to the region. How do you view the US presence and role within ASEAN? What should US companies and leaders know about ASEAN and how does their presence compare to other nations including Japan, Korea, Australia, and the EU?

The US remains an important partner and market for ASEAN and when looking at its involvement in the region, there are three strands we can talk about. The first is like an underlying current in the ocean, the second is the waves on top, and third like a bright object on the surface. If you look at the current, the destiny of the US remains very much an outward one. It is the country that created the modern world and global trading system you and I have grown up in. It was built to America’s advantage and I think this strong current of the US having shaped and benefitted from this world is ever-present despite current tensions. So we have not seen, whichever President, a lack of interest from US business, its military or security establishment. So whether you call it an Asian Pivot, Indo-Pacific region or before that the War on Terrorism, we believe this current can and should have reasons to continue.

At the same time, there are waves on the surface. These are more noticeable, as it is hard to see the underlying current unless you put your hand deep below. The waves do matter and I would say right now they are choppy and we are now going through a period where Americans are questioning globalization and retreating from multilateralism and international engagement. I was in Seattle during the 1999 WTO protests. At the time President Clinton had the political savvy to suggest we let these voices in to assuage concerns – even as he was the president who signed and implemented the NAFTA agreement. As a result, after a time, things calmed down and the situation became less tense for the moment.

Since then, however, the waves have gotten more turbulent, and it is important to recognize the tensions that brought Trump into office are not singular to him. Remember that Hillary Clinton responded to those choppy waves in her election bid. She supported the Trans-Pacific Partnership (TPP) agreement while Secretary of State, and yet as a candidate against Trump, she too expressed doubts about the TPP. So it is not just the Trump administration and we can see a wave of US constituencies questioning and expressing concerns.

The concern is rising to the point where now even the underlying current of outward movement that I mentioned is less visible. Companies are now being judged by how many jobs they are reshoring and their loyalty to America and American jobs. This is now seen as more important than an overall win-win growing the global economic pie paradigm, which has guided the thinking of policymakers and companies for decades.

And then there is the ball or float which can be seen in tweets and incendiary rhetoric. These attract a lot of attention and concern but they are not necessarily consistent. You mentioned the Indo-Pacific strategy and frankly, I haven’t really seen one. I have seen Indo-Pacific statements and senior US officials talking about issues, but I haven’t seen an overall strategy tying things together. I have to say I view this from an ASEAN perspective and generally, ASEAN is the final stop after a comprehensive strategy dealing with other parts of Asia is finalized.

There is also much less US involvement in multilateral institutions. This is important given the nature of the problems the world faces today. I also think the State Department itself has less access and the whole US establishment which has guided foreign policy and economic engagement, has been weakened.

At the same time other countries – and China in particular – have upped their game. They engage us, not only at the top level – but very thoroughly on an ongoing basis.  Ambassadors of these countries, whether you agree with them or not, are out all the time engaging people, and are much more present. The US is still here but less than in the past. Take something as simple as Ambassadors. How many ASEAN countries have sitting US Ambassadors? And if you talk with the ones that are here, how much access do they have into Washington and White House decision-making at a high level? Stove-piping is always a problem in big countries, but it is now becoming a more serious issue.

Since the early days of ASEAN, China has developed rapidly and has now become the world’s second-largest economy. It is also a major driver of economic growth and seeks greater regional and global influence through vehicles such as the Belt and Road Initiative (BRI) and Asian Infrastructure Investment Bank (AIIB), at a time when the US is backing away from multilateral institutions and its traditional role as a global leader on a range of important issues. As tensions rise between China and the US, both in terms of trade as well as influence and security, how is the region affected, and what are the challenges ASEAN countries face in navigating this changing environment?

The pandemic makes a vast difference. We are trying to figure out in a post-pandemic world whether China or the US will recover faster and at the moment the answer seems to be China. It is still early, however, and of course, there is now an outbreak in Beijing so we will have to see. At the same time within China, there seems to be a growing understanding they need to remain engaged with the outside world. They also did not have this pre-pandemic spirit of isolationism and questioning of whether it is good for China to export and invest abroad. So unlike the US, they did not come into this with a globalization backlash, strengthened further by the pandemic.

Singapore recently entered into a “green lane” agreement with China for business travel and Singapore-based businesses of all nationalities can now travel to six cities and regions of China with minimal testing as a first step toward reopening our borders. This is not political but an effort to restore supply chain links and our ability to operate as a hub while maintaining decent safety levels. We are also trying to open Australia and New Zealand, and other countries in ASEAN, but those discussions are not yet concluded.

Also, if you look back to the global financial crisis of 2008, it is notable that Asia and China kept growing. While the US did not shrink, in relative terms its global market share declined. That caused an adjustment similar to when an elevator goes up and suddenly stops. I feel if the US does not respond correctly to the current situation, we may experience another of those adjustments; it doesn’t mean the US will fade and fall down the elevator shaft, but there will be another jerky moment and perceptions in this part of the world will shift further as they did after the onset of the global financial crisis.

That said, people in ASEAN want more US involvement and encourage US investment and more participation by US firms. We think of the market and technology as rational and neutral, but it is beginning to get colored. Meaning if people think the winner will be China there is a tendency to go more in that direction – even though we are still fighting to keep things as neutral, rational, and as inclusive as possible. You can see that in the struggle over the decision this week to award Singapore’s 5G network to Ericsson and Nokia, though it still maintained a smaller role for Huawei.

In the past, there was a belief in the west that China’s development would lead it toward a more democratic form of government and integration within the global trading system that arose following the Second World War. In recent years it has become apparent this is not the case and China is embarking on its own path. This has led to growing concerns about China’s aspirations and efforts to exert global leadership and establish standards in new technologies as seen its “Made in China 2025 initiative”, its policy toward Hong Kong and Taiwan, cybersecurity and privacy, social credit scoring and other policies, practices, and beliefs. Do you share these concerns? How does China’s model translate to ASEAN and do you see a new “Cold War” developing in which countries will be asked to choose sides?

I have studied, lived in, and like the US, but never assumed China would become more democratic. I believe the Party will have to evolve and change in response to China’s development but never assumed this would necessarily be in a democratic direction. When I look at the region beyond China, I would also say most in Asia are not a democracy in the US-style. Even look at Japan, which you Keith know well. It is not a one-party system like China but it is not a US-style democracy. Neither is Singapore. We will have an election here in less than two weeks, yet there is almost no doubt which party will win. So I am not sure you as an American would describe such systems as democracy.

So I do not look at China through an ideological lens of democracy and have always thought China would do what made sense for China. As neighbors, we do have to figure out whether what is good for China will be a threat to us, rather than win-win. This applies when we look at Chinese investment; we tend to look at it through pragmatic calculations. I do not begin with the assumption that it is an attempt to politically suborn every place where they invest. There are of course risks that remain but they can be managed. For example, with BRI we have talked to Myanmar and others about the risks of unproven projects that burden them with high debt. That is Singapore’s style. We initiate projects incrementally. We start with one terminal and gradually expand to five, or one chemical factory into a large complex as demand is proven. We have an idea of where we want to go – but build incrementally rather than start with grand projects.

That is why you now see a number of Singapore industrial parks in Vietnam. These parks are not just physical spaces. Some provide training, education, and skills development for local workers so they can better serve companies based there. This helps our neighbors while developing our role as a hub. Singapore companies are also involved in BRI. For example, Surbana Jurong provides consultancy services to some Chinese investors in ASEAN countries, as well as acting for the hosts on other occasions. The Port of Singapore Authority (PSA) is also pushing out into the region and beyond; recently opening a joint port in Greece with Cosco, a Chinese shipping line. So Singaporean efforts are to seek cooperation and commercial deals that look non-ideologically to support globalization and free trade around the world.

The bigger question is the “new Cold War” between the USA and China. We do feel it. We try to make rational decisions based on market principles but increasingly everything is reduced to whether “you are for or against China or the US.” For the AIIB, Singapore participated from the start because infrastructure is a big issue in the region. We are in the Asian Development Bank (ADB) too and the World Bank. We think there is no reason we can’t be in more than one, and I do not see why the US objected to the AIIB or what was the alternative they were offering. On the other hand, when American’s spoke about the Indo-Pacific we were happy to work with our ASEAN colleagues to develop an ASEAN understanding and response.

The view of the Indo-Pacific that ASEAN has developed is slightly different than the US, as our goal was to make it more inclusive and not just for democracies. But we do agree a larger framework for the region is necessary. For Singapore, as close friends with India, we have no problems working with them as well and continue to hope they will become more and more integrated with the region.

Even before the coronavirus and heightened US-China trade tensions, corporations were beginning to reevaluate global supply chains to lessen their reliance on Chinese production. Many view ASEAN as a natural beneficiary, offering cost and diversification benefits. As a result, we see many clients giving the region more consideration given its strategic location, strong infrastructure and its ability to bridge operations that had been based in China and still rely on inputs from there. How do you view ASEAN’s potential as the region rises in importance as a hub within the global supply chain? What are the prospects for developing and more developed countries in ASEAN– as well as integration between the two, for example, the relationship between Singapore and Batam/Bintan and the Riau Islands, where we have been active for many years, located in Indonesia only 12 miles away?

Our greatest fear is not a splintering of global supply chains but rather the idea of bringing everything back home in response to growing nationalism. Big countries sometimes think they can do that – whether it is the US, China, India, or even Indonesia. They believe they can produce everything for themselves and capture their own market. We used to see this in the “import substitution” and “beggar thy neighbor” days. That is something we need to work together to avoid. Post-pandemic there will be exceptions and a degree of self-supply is important, for example with masks and ventilators, to prevent a cut-off of supply. Similarly, markets such as Singapore which imports almost 100% of its food supply, need to rethink being completely reliant on offshore sourcing. But we need to make sure that tilt does not go too far.

But I would emphasize we are not going to exclude China either. The interesting question is whether we still believe in global supply chains. I think the answer is that we do, provided that security and other key concerns can still be addressed. If that is the case, countries that can provide that, who can reliably manage increasing supply chain complexity with good governance and rule of law, with an ability to deliver will be rewarded. ASEAN and Singapore are well-positioned in that regard.

The larger danger is that countries retreat back completely to a reliance on national production and protectionism. It is a lesser danger for supply chains to split into two, one being the US and the other a Chinese supply chain. Sometimes it is important for other countries to have guts and stand up against that and bullying from either side. This is especially important during the pandemic when some powerful countries were trying to grab masks and other medical supplies for themselves when these had been contracted to others. For Singapore, and for me as an attorney and international lawyer, I emphasize the importance of fulfilling contracts. This does not always work to our advantage in Singapore. Sometimes in the pandemic, neighbors cut off supply but we still try our best to observe our commitments. The rule of law is important. The bottom line is – trust is something you can’t ditch in a crisis.

You ask about Batam and Bintan as part of our strategy to expand across the region. These islands are part of Indonesia but stand just a small distance from Singapore. Back in the early 1990s, there was a lot of excitement in Singapore about their development as an early step in regionalization and cross border cooperation. They are still significant; proximity still matters, but not quite as much as before. Other opportunities arise, and regionalization has deepened. One newer aspect is whether that proximity is connected to another market.

For example, a major Singaporean company now has an industrial park operating in central Java that caters to Indonesia, rather than offshore markets like Batam and Bintan. Singapore also has more than seven industrial parks in Vietnam – and we do more there than in these Indonesian islands nearest us. Why? It is not because we do not like Batam and Bintan; they also have a role to play. But they do not enjoy any special preferences or contiguous market, have no natural workforce so workers there are imported from other parts of Indonesia. In the end, they remain useful, allow easy commuting, but do not provide a definitive advantage in an environment characterized by deeper and more complex regional integration.

ASEAN has been severely affected by the coronavirus – and by most measures handled the pandemic relatively well. Can you talk about how the virus has been handled in Singapore and other countries in ASEAN, the nature of regional cooperation, and how the pandemic is likely to affect economic and other aspects of integration moving forward? What lessons should the US take from the ASEAN experience dealing with the virus?

There are differences in how ASEAN countries have handled this and from what we can see, Vietnam has come out on top in terms of controlling the pandemic. In Singapore, the overall national numbers may look scary, but it is under control for most of the community though the problem is acute within the foreign work dormitories which account for the bulk of numbers.

Singapore has a strong health system and has ramped up testing and treatment facilities; our medical system has coped and there has been a very low mortality rate. Malaysia and Thailand are also doing relatively well. For Laos, Cambodia, and Myanmar the numbers seem ok but it is really hard to know for sure, given low levels of testing. In Southeast Asia, I think the biggest worry is Indonesia where numbers are beginning to rise while the country faces strong economic pressure to reopen.

A key question is transparency. The more you test the more you find cases. So we look at testing rates as an indicator. In Singapore, we have good testing for a small population. As testing increased in dorms for migrant workers, this caused our numbers to really jump. It was just last week that Indonesia overtook us as having the most cases – and we have to ask why did it take that long? Basically, many countries are not testing enough. When they do test, it is for confirmed cases and not more generally – and the number of tests per million is very low. So from the reported numbers, the situation may look acceptable, but no one can be quite sure.

The current question is how to ease up the restrictions to restart the economy and allow travel across borders. There are worries about importing cases and all countries have at least temporarily closed off tourism, which are important parts of their economies. In the pipeline, I think green lanes for business are possible. But there will continue to be concerns about large numbers of tourists unless easy and reliable testing and (ideally) vaccines are ready. So we will have to figure out how to manage borders – allowing transport of workers as well as goods and services – to restart our economies and manage our integration and supply chains in an increasingly interdependent region.

One of the things we have learned is we have to be open to help from outside and cooperation is critical. In early February we first had a China-ASEAN meeting on how to deal with the virus and it was just China, but then we had an ASEAN Summit and this was notable in bringing in Japan and Korea – two countries that have the industry and technology needed to help. Now some of us are advocating Australia and New Zealand also need to be added as well. If we address the pandemic together – we have a much better chance of containing and dealing with it. Harmonizing our approaches to treatment and travel is important. Multilateral dialogue and cooperation are essential and world leaders should encourage talk rather than just closing borders.

India also represents a major economy that borders ASEAN and has traditionally had a major impact though often gets overlooked given the attention paid to China. What is your view on India as a regional and global player and how important is its economy to the development of ASEAN and how should companies be approaching this important market? Additionally, any thoughts on current tensions between India and China?

Last year before the pandemic we had the Regional Comprehensive Economic Partnership (RCEP) discussions which could potentially not only open up India but bring India more into the region as a major global manufacturer and supplier – much as China embarked on that path decades ago. RCEP’s importance rose after the US withdrew from TPP negotiations, and aimed to bring together all ASEAN members and our key trading partners — including India, Australia, China, Japan, New Zealand, and South Korea. But it seems the Indians didn’t like that vision or thought the costs of opening up their market were too high and walked away.

They thought they could scupper the whole initiative, but ASEAN has decided to go ahead without them. That was not our hope and it would have been much better to include them, but we were not going to let India veto RCEP, and it will now proceed, aiming to conclude by the end of 2020. I always tell my Indian friends we have to move – particularly now with the pandemic – and they would be advised to jump on board.

India has tremendous potential and their size and promise will always be there – but it is a bit like a giant universe operating by itself – cut off from the outside. That is sad as there are some really top-class Indian companies that can more than compete in the region. But India as a whole has not really been fully engaged. The politics are complicated – and while Singapore remains great friends of India – it remains to be seen if a path forward can be found. If Prime Minister Modi with all the support he enjoys is not willing to open up, how and when will it happen? Compound that with the pandemic and a lack of desire to integrate, and my fear is India will miss the boat.

For Indonesia, the largest country in ASEAN, it’s different. They know investors are questioning reliance on China because of costs and Sino-American conflict and are working to catch the attention to join global chains and attract more investment to create more and better paying industrial jobs. They are trying but it won’t be easy. China has retained many supply chains, and many that moved decided to go to Vietnam.  One Indonesian minister I know quite well is working hard to attract jobs and promote innovation and some companies are moving to base there. The minister told me his scorecard is based on an ability to attract foreign investors and industry. It will be difficult, but it is good they are trying. India, however, has mostly been sitting on the sidelines and it may only get harder over time.

Singapore is one of the world’s great success stories and has become a preferred destination to establish businesses and operate for companies in a wide range of sectors, including as a world financial center. For many years we operated our own company there as a base for activities in Myanmar, Indonesia and other ASEAN markets which lacked the same level of infrastructure, governance and services. Does the Singapore model hold, and what changes need to be made, as neighboring countries develop? Can you tell us about current Singapore initiatives, the upcoming election and the “bubbles” that are being created for business, travel and trade?

Singapore understands we serve as a hub for the region and if we cut ourselves off due to the pandemic and health reasons, we will find ourselves in a bubble that does not have enough air for all of us. You can live your life that way if you need to, but resources become scarce and it will not be much of a life. So we have to reopen, and all small economies face similar issues. New Zealand for example is further away but faces similar decisions.

That is why we talk about green lanes and bubbles. We need to start but in a controlled way with trusted partners. In the past, we were wide open. When you entered Changi Airport, even before you got to the doors, they opened wide. There was seldom a line and often no one even checked your luggage. Now, while I have not been there in five months, I imagine the scanners are working overtime. You need to show a health certificate and the process is much more cautious and guarded.

My analogy is that we have gone from an automatic door and seamless travel to a situation that requires a special pass and perhaps a key before you will be able to pass. Safety concerns are a priority. But for Singapore, the important thing is the doors need to remain open even if there are more checks and verifications to ensure adequate safety and easy passage. Singapore is committed to that. The government just formed a new public-private partnership called the “Emerging Stronger Task Force”. This will gather ideas on how to develop new processes and procedures to get better ideas on Singapore’s economic strengths, and how to move forward into the “new normal” in the wake of the pandemic.

It won’t be easy. But when I look back, there is reason to believe we can rise to the challenges. Singapore came out stronger from the Asian financial crisis and we are determined to do that again. That was true after the global financial crisis as well. If we get it right, Singapore can come out stronger this time as well. Of course, we could get it wrong and have made mistakes along the way;  two recoveries do not automatically translate into a third so we have to be careful not to have hubris and to work hard and innovate to succeed.

As you know we have been active and involved with Myanmar’s development for many decades, and one of the more interesting developments – at least in terms of Singapore – are long term plans to develop deep seaports in Kyauphyu, which would provide a land route into China. This initiative would allow shippers to bypass the Straits of Malacca and the Port of Singapore which has long dominated trade in the region. How do you view Myanmar’s prospects and the potential of these projects?

Do we see other ports in the region as a direct threat to Singapore? The answer is no. We think win-win. Our ports are busy and before the pandemic operated almost at full capacity. If Asia continues to grow, the volume of traffic will grow even more. The PSA has been expanding internationally to places in the region and beyond. Moreover, within Singapore land is very valuable and there is a plan to create a new mega port named Tuas in the north of the island. The current site of one port is very close to the city and is such valuable land that, rather than stacking containers, far more value can be realized if it is used for real estate and infrastructure development. So while we do want Singapore to continue as a major port, this means that we welcome and want to participate in growth across the region.

As for Myanmar more generally, we are very encouraged and remain positive. We would love to see them come up like Vietnam. As mentioned, there are several Singaporean industrial parks there and while there are none are as yet in Myanmar – we have very good relationships there and see lots of potential. Many people from Myanmar received their education and training in Singapore and many Myanmar companies rely on Singapore for banking, legal and financial services. So there are extensive people-people relationships and we want to help and be part of their development. Also, two of the most active banks in Myanmar, UOB and OCBC are from Singapore and as Myanmar opens up and liberalizes they are seeking to increase their presence.

Thank you Simon for your time and attention. Look forward to speaking again soon!

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Keith Rabin serves as President at KWR International, Inc., a global consulting firm specializing in international market entry; trade, business, investment and economic development; site location, as well as research and public relations/ public affairs services for a wide range of corporate and government clients.

metallised yarn

Global Metallised Yarn Market 2020 – Key Insights

IndexBox has just published a new report: ‘World – Metallised Yarn And Strip – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

Global Trade of  Metallised Yarn 2014-2018

Global exports amounted to 23K tonnes in 2018, picking up by 11% against the previous year. In value terms, metallised yarn exports totaled $253M (IndexBox estimates). In general, exports continue to indicate a relatively flat trend pattern. Over the period under review, global metallised yarn exports attained their maximum at $261M in 2014; however, from 2015 to 2018, exports stood at a somewhat lower figure.

Exports by Country

China represented the largest exporter of metallised yarn and strip exported in the world, with the volume of exports recording 13K tonnes, which was approx. 58% of total exports in 2018. It was distantly followed by India (4.2K tonnes) and Turkey (1.3K tonnes), together achieving a 24% share of global exports. The following exporters – Japan (524 tonnes), Germany (428 tonnes), Georgia (414 tonnes) and France (392 tonnes) – each accounted for a 7.8% share of total exports.

China experienced a relatively flat trend pattern with regard to volume of exports of metallised yarn and strip. At the same time, Georgia (+140.7%), Turkey (+16.2%) and India (+7.4%) displayed positive paces of growth. Moreover, Georgia emerged as the fastest-growing exporter exported in the world, with a CAGR of +140.7% from 2014-2018. By contrast, Japan (-4.2%), France (-7.2%) and Germany (-11.8%) illustrated a downward trend over the same period. India (+4.6 p.p.), Turkey (+2.6 p.p.) and Georgia (+1.8 p.p.) significantly strengthened its position in terms of the global exports, while China saw its share reduced by -2.2% from 2014 to 2018, respectively. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, China ($109M) remains the largest metallised yarn supplier worldwide, comprising 43% of global exports. The second position in the ranking was occupied by Japan ($21M), with a 8.4% share of global exports. It was followed by India, with a 6.1% share.

Export Prices by Country

In 2018, the average metallised yarn export price amounted to $11,157 per tonne, coming down by -4% against the previous year. Overall, the metallised yarn export price continues to indicate a slight descent. The pace of growth was the most pronounced in 2016 when the average export price increased by 9% year-to-year. The global export price peaked at $11,617 per tonne in 2017, and then declined slightly in the following year.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Japan ($40,672 per tonne), while India ($3,642 per tonne) was amongst the lowest.

From 2014 to 2018, the most notable rate of growth in terms of prices was attained by China, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

BIS

BIS Introduces Significant Restrictions on U.S. Exports to China, Russia, and Venezuela

On April 28, 2020, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) published three amendments to the Export Administration Regulations (“EAR”) that are expected to have a significant impact on businesses – both within the U.S. and beyond – with regard to the export, re-export, or transfer of goods, software, and technology subject to U.S. jurisdiction to Chinese, Russian, and Venezuelan entities, including both commercial and military end-users.

The first rule expands existing export restrictions on military end-users in China, Russia, and Venezuela. The second rule eliminates License Exception Civil End Users (“CIV”), which previously authorized the export of certain items restricted for national security reasons to countries in Country Group D:1, including China, Russia, and Venezuela. These two rules are being issued as final rules (i.e., without an opportunity for public comment), and will become effective on June 29, 2020. The third rule is a proposal to modify license exception Additional Permissive Reexports (“APR”), which currently authorizes the re-export of certain U.S.-origin items from third countries to China and other Country Group D:1 destinations that cannot be exported directly from the United States without a license. Under the proposed revisions, a license from BIS would be required for such re-exports. Comments on this proposal must be received by BIS no later than June 29, 2020.

The three rules may have been the product of a White House Cabinet meeting that apparently took place on March 25, 2020.  That meeting reportedly considered U.S. policies with respect to transfers of U.S. technology to China, particularly those involving Huawei. Prior to the meeting, BIS prepared two draft rules that would (1) reduce the de minimis U.S. controlled content threshold applicable to Huawei and its affiliated companies from 25% to 10%, which would dramatically increase the number of foreign-made products that would be considered subject to U.S. jurisdiction and therefore require a license, and (2) amend the EAR’s “foreign direct product rule” to limit Huawei’s ability to obtain chips that are the product of U.S.-origin semiconductor manufacturing equipment (for example, chips produced by Taiwan Semiconductor Manufacturing Company).

According to reports, the Cabinet meeting resulted in an agreement to tighten these limitations through an amendment to the foreign direct product rule. While that rule has not yet been released by BIS (and may yet be forthcoming), the three rules published on April 28, 2020, constitute an even broader effort to tighten technology controls on China.

Expansion of Export, Re-export, and In-Country Transfer Controls for Military End-Use or Military End Users

The first rule will significantly expand export restrictions on military end-users by broadening the list of items requiring a license when exported, re-exported, or transferred to a “military end-user” or for a “military end-use” in China, Russia, and Venezuela pursuant to § 744.21 of the EAR.  For example, under the new rule, mass-market encryption items classified under Export Control Classification Number (“ECCN”) 5A992.c would trigger the license requirement.  Popular consumer devices – including mobile phones, laptops, and “smart” devices – may potentially be restricted under the new rule if intended to any “military end-user” or a “military end-use” in any of the three destinations.

In connection with this new rule, it is important to note that the existing definition of “military end-users” is already very broad. In addition to the army, navy, air force, marines, and coast guard, it also includes “national guard/police, government intelligence and reconnaissance organization[s],” as well as “any person or entity whose actions or functions are intended to support ‘military end-uses.’” Additionally, the rule further expands the definition of “military end-use” to include any item that supports or contributes to the operation, installation, maintenance, repair, overhaul, refurbishing, “development,” or “production,” of certain military items.

Businesses involved with the export, re-export, or in-country transfer of items or technology subject to U.S. jurisdiction to China, Russia, and Venezuela will, therefore, need to conduct increased diligence and carefully assess whether the end-users or end-uses of those items or technology fall within these broad definitions, in particular government-adjacent end-users, such as state-owned enterprises or government contractors. BIS has indicated that it intends to issue guidance regarding the level of due diligence it expects from industry to comply with the expanded licensing requirements.

Additionally, this rule broadens the list of items requiring a license when exported to a military end-user or for a military end-use to cover items and technology subject to relatively low levels of control that relate to materials processing, electronics, telecommunications, information security, sensors and lasers, and propulsion. The new ECCNs covered under the scope of new regulation include, by way of example, mass-market encryption items and software (e.g., smartphones), certain microchips and integrated circuits, certain electronic testing and processing equipment, telecommunications test equipment, and certain materials processing equipment, such as mining and drilling equipment and industrial pumps.

Further, while exports that previously required a license under § 744.21 were reviewed on a case-by-case basis by BIS, the new rule states that license requests will be reviewed under a presumption of denial.  This means that such applications will be rejected in principle unless the presumption can be overcome. Overcoming the presumption is fact-specific and rare, but will likely depend upon the policy goals of BIS at the time the license application is made (for example, BIS could conclude that an export that would meet a humanitarian need could outweigh the presumption of denial).

Finally, the rule separately expands Electronic Export Information (“EEI”) filing requirements in the Automated Export System (“AES”) for all exports to China, Russia, or Venezuela. Previously, exporters were not required to file an EEI for many shipments valued under $2500 (unless an export license is required), nor was it necessary to enter the ECCN in the EEI when the item is classified EAR99 (i.e., the item is not identified on the Commerce Control List (“CCL”)), nor if the sole reason for control is for anti-terrorism (“AT”) reasons. The new rule will now require filing an EEI for all items destined to China, Russia, or Venezuela regardless of the value of the shipment unless the shipment is eligible for License Exception GOV. This is significant because the failure to file EEI, even if a license from BIS is not required, may constitute a separate violation of the EAR and of the Foreign Trade Regulations administered by the U.S. Census Bureau.

Elimination of License Exception Civil End Users (CIV)

Pursuant to the second new rule, License Exception CIV is eliminated in whole. In the explanatory portion of the final rule, BIS stated, “the primary goal of this effort is to advance U.S. national security, foreign policy, and economic objectives by ensuring an effective export control and treaty compliance system and promoting continued U.S. strategic technology leadership.” While the final rule did not make mention of China, China most assuredly is the primary target of this effort, as the country has long been criticized by Trump Administration officials for exploiting perceived gaps in U.S. export controls via retransfers of U.S. technology. Previously, the License Exception authorized the export, re-export, or transfer (in-country) of certain items subject to control only for low-level national security (“NS”) reasons, and identified as eligible for the license exception most commercial end-users in destinations identified in Country Group D:1 (including China, Russia, and Venezuela, among other countries), without the need for prior review by BIS. This rule modification removes the previously applicable license exception for such low-level items.

Modification of License Exception Additional Permissive Reexports (APR)

Finally, citing the need “[t]o get better visibility into transactions of national security or foreign policy interest to the United States,” BIS proposes to modify License Exception APR for certain controlled items.  Previously, paragraph (a) of License Exception APR authorized the re-export of certain US.-origin items from a country in Country Group A:1 (i.e., countries, like the United States, participating in the Wassenaar Arrangement for multilateral export controls) or Hong Kong to certain more controlled destinations, provided that the re-export is consistent with an export authorization from the country of re-export.

In particular, License Exception APR currently authorizes re-exports to Country Group D:1 (which, as noted above, includes China, Russia, and Venezuela) so long as the items are only subject to national security controls.  BIS is proposing to remove countries in Country Group D:1 as a category of eligible destinations, as “even Wassenaar participating states in Country Group A:1 may have export authorization policies that do not align with the national security or foreign policy interests of the U.S. government.” If License Exception APR is modified as proposed, re-exports of certain national security-controlled items must be reviewed by the U.S. government before proceeding. Given the increasing consensus within the U.S. government that additional U.S. export restrictions will be needed to counter China’s “civil-military fusion,” it is reasonable to conclude that the new rule also is intended to target China in particular.

Unlike the other two rules released contemporaneously by BIS, this third rule is only a proposal. BIS is currently accepting comments on the rule through June 29, 2020, and so it is possible that revisions may be made to the final version of the rule. Companies that would be affected by the proposed rule and other interested parties should consider drafting comments on the rule to make their voices heard prior to the deadline.

Conclusion

The three rules published by BIS on April 28, 2020, reflect the Trump Administration’s latest effort to pursue stricter controls on U.S. goods and technology, even as the full economic effect of the COVID-19 pandemic has yet to be realized. While the April 28, 2020 rules impact exports, re-exports, and in-country transfers to a variety of destinations, based on reports of the March 25, 2020, Cabinet meeting, and other high-profile actions targeting Huawei, China appears to be the principal motivation behind the new rules.

Although the two final rules will not become effective for 60 days, all companies conducting cross-border transactions involving goods, software, or technology subject to U.S. jurisdiction should carefully conduct due diligence on the end-users of their items and ensure that their compliance procedures are fully implemented to avoid even inadvertent violations of these tightened trade restrictions.

stock

Global Stock Markets Impacted by Trade War

Understanding the finer points of the stock market and the how and why of its ups and downs is a complex task for anyone. When major shifts in a whole diaspora of fields occur, people often look to the stock market as a gauge for how significant those shifts really are and what the potential results are going to come out as. World news is often reported as to how it has an impact on the world of finance, and this is certainly one such instance, as President Trump trades tariff blows with China in a rapidly escalating trade war. The impact of this trade war certainly didn’t avoid the stock market, which took notice of the shifting costs of exports and imports and created a noticeable response. Let’s take a look at what’s really going on in this recent episode in the global economy.

Trump VS China

The US President’s attitude towards foreign nations is an eternally shifting spectrum, though it does tend to rest somewhere towards antagonistic for the sake of sending a message. Trump’s ‘show of force’ tactics recently got him into a situation with China on a trade front, causing a situation that has impacted all of the global markets, and heavily impacted the American and Chinese markets. “Trump has a latent tension towards China that simply won’t abate, no matter how few tangible issues there are in reality. This drove him most recently to impose some pretty severe tariffs on Chinese goods,” reports Samuel Chang, data analyst at WriteMyx and BritStudent.

US Tariff

The United States began a 15 percent tariff on hundreds of billions of dollars of Chinese goods for import, from tech to clothing. Trump’s explanation for his move relates again to his suspicion of all of the largest global powers, from Russia to China. He spoke out, via his favorite medium Twitter, about the US over-reliance on Chinese exports, and that his tariff was a motivator for US companies to look for alternative solutions for suppliers outside of China, rather than simply turning to some nation over and over again to supply the products they needed.

Trump’s Reasoning

Trump’s steps to disincentivize US trade with China could be viewed as impulsive, since the immediate effects of so drastic a tariff will likely fall on the US consumer, with US household costs potentially rising by up to $1000 a year, with such a large selection of consumer goods now made noticeably more expensive. Similarly, Trump’s plan, though it must have considered the possibility of consequences, didn’t allow for a reaction in the opposite direction as the Chinese trade officials lashed back at the tariff.

The Chinese Response

Not ones to be out-maneuvered, least of all by Trump, the Chinese responded to the tariffs with sanctions of their own that were as much a political response as a practical one, as they delivered a counter punch to Trump’s initial move. China immediately imposed additional tariffs on exported goods on a $75-billion target list, and further tariffs were placed on thousands of items originating from the US. Similarly, China was quick to begin imposing new duties on US crude oil, a predictable but damaging move that has made the potential fallout and impact on global stock markets more noticeable.

The Trade War Fallout

“Such actions from nations as influential as the US and China don’t come without an impact that affects people from all around the world. In this instance, a variety of shifts have left most markets a little worse for wear, but most drastic damage has been avoided”, explains Mark Cherry, a business writer at Australia2Write and NextCoursework. The fallout included the US stock futures dipping 0.7% and the Asian markets are down. A noticeable drop in oil prices was also recorded, as would have been expected after the duties imposed on US crude by the Chinese.

Conclusion

This is the latest in a series of jabs between the US and China, though there is no sense in which these sorts of interactions have all that much of a practical purpose. Though this particular episode abated pretty swiftly, the threat of further escalations has made the market quite jittery.

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Mildred Delgado is a young and responsible marketing strategist at PhdKingdom and AcademicBrits. She works with a company’s marketing team in order to create a fully-functional site that accurately portrays the company. Mildred is also responsible for presenting these details to stakeholders in a series of marketing proposals. You can find her work at OriginWritings.

pears

Global Pears and Quinces Market Rose 2.9% to Reach $26.1B in 2018

IndexBox has just published a new report: ‘World – Pear And Quince – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The global pears and quinces market revenue amounted to $26.1B in 2018, increasing by 2.9% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

Pear and Quince Consumption by Country

China (16M tonnes) remains the largest pears and quinces consuming country worldwide, accounting for 65% of total volume. Moreover, pears and quinces consumption in China exceeded the figures recorded by the second-largest consumer, the U.S. (677K tonnes), more than tenfold. Turkey (631K tonnes) ranked third in terms of total consumption with a 2.6% share.

In China, pears and quinces consumption increased at an average annual rate of +1.2% over the period from 2009-2018. The remaining consuming countries recorded the following average annual rates of consumption growth: the U.S. (-1.4% per year) and Turkey (+3.6% per year).

In value terms, China ($16.8B) led the market, alone. The second position in the ranking was occupied by the U.S. ($819M). It was followed by Italy.

The countries with the highest levels of pears and quinces per capita consumption in 2018 were China (11 kg per person), Italy (10 kg per person) and Turkey (7.73 kg per person).

From 2009 to 2018, the most notable rate of growth in terms of pears and quinces per capita consumption, amongst the main consuming countries, was attained by Turkey, while pears and quinces per capita consumption for the other global leaders experienced mixed trends in the per capita consumption figures.

Market Forecast to 2030

Driven by increasing demand for pears and quinces worldwide, the market is expected to continue an upward consumption trend over the next decade. Market performance is forecast to accelerate, expanding with an anticipated CAGR of +1.9% for the period from 2018 to 2030, which is projected to bring the market volume to 30M tonnes by the end of 2030.

Pear and Quince Production 2009-2018

In 2018, the amount of pears and quinces produced worldwide amounted to 24M tonnes, approximately equating the previous year. Overall, pears and quinces production, however, continues to indicate a relatively flat trend pattern. The pace of growth was the most pronounced in 2011 when production volume increased by 6.7% year-to-year. The global pears and quinces production peaked at 27M tonnes in 2014; however, from 2015 to 2018, production failed to regain its momentum. The general positive trend in terms of pears and quinces output was largely conditioned by a relatively flat trend pattern of the harvested area and a slight expansion in yield figures.

In 2018, approx. 1.5M ha of pears and quinces were harvested worldwide; stabilizing at the previous year. Global average pears and quinces yield totaled 17 tonne per ha in 2018, approximately equating the previous year.

Pear and Quince Exports 2009-2018

In 2018, the amount of pears and quinces exported worldwide amounted to 2.8M tonnes, leveling off at the previous year. The total export volume increased at an average annual rate of +1.6% from 2009 to 2018. In value terms, pears and quinces exports amounted to $2.8B (IndexBox estimates).

Exports by Country

In 2018, China (539K tonnes), followed by the Netherlands (349K tonnes), Argentina (317K tonnes), Belgium (290K tonnes), South Africa (222K tonnes), Italy (158K tonnes), the U.S. (132K tonnes) and Chile (129K tonnes) were the main exporters of pears and quinces, together generating 77% of total exports. Portugal (111K tonnes), Spain (102K tonnes), Turkey (65K tonnes) and Belarus (51K tonnes) occupied a minor share of total exports.

From 2009 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Belarus, while exports for the other global leaders experienced more modest paces of growth.

In value terms, the largest pears and quinces supplying countries worldwide were China ($594M), the Netherlands ($395M) and Argentina ($294M), together accounting for 46% of global exports. These countries were followed by Belgium, Italy, South Africa, the U.S., Chile, Portugal, Spain, Turkey and Belarus, which together accounted for a further 43%.

Among the main exporting countries, Turkey recorded the highest growth rate of the value of exports, over the period under review, while exports for the other global leaders experienced more modest paces of growth.

Export Prices by Country

The average pears and quinces export price stood at $1,003 per tonne in 2018, picking up by 3.9% against the previous year. Over the period under review, the pears and quinces export price continues to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2013 an increase of 16% y-o-y. In that year, the average export prices for pears and quinces attained their peak level of $1,146 per tonne. From 2014 to 2018, the growth in terms of the average export prices for pears and quinces failed to regain its momentum.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Italy ($1,298 per tonne), while Belarus ($291 per tonne) was amongst the lowest.

From 2009 to 2018, the most notable rate of growth in terms of prices was attained by China, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

amine compounds

China Remains the Largest Amine Compounds Supplier in Asia-Pacific

IndexBox has just published a new report: ‘Asia-Pacific – Amine-Function Compounds – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Amine Compounds Exports in Asia-Pacific

In 2018, approx. 1.1M tonnes of amine compounds were exported in Asia-Pacific; picking up by 8.6% against the previous year. The total export volume increased at an average annual rate of +5.1% from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being recorded in certain years. The most prominent rate of growth was recorded in 2017 when exports increased by 15% y-o-y. Over the period under review, amine-function compounds exports reached their maximum in 2018 and are likely to see steady growth in the immediate term.

In value terms, amine-function compounds exports stood at $3.3B (IndexBox estimates) in 2018. The total export value increased at an average annual rate of +1.8% over the period from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations over the period under review. The growth pace was the most rapid in 2017 when exports increased by 16% y-o-y. Over the period under review, amine-function compounds exports attained their peak figure in 2018 and are expected to retain its growth in the immediate term.

Exports by Country

China was the major exporter of amine compounds exported in Asia-Pacific, with the volume of exports amounting to 785K tonnes, which was approx. 72% of total exports in 2018. It was distantly followed by India (121K tonnes), Japan (81K tonnes) and South Korea (65K tonnes), together making up a 25% share of total exports.

China was also the fastest-growing in terms of the amine-function compounds exports, with a CAGR of +7.8% from 2013 to 2018. At the same time, India (+5.5%) and South Korea (+3.4%) displayed positive paces of growth. By contrast, Japan (-5.6%) illustrated a downward trend over the same period. From 2013 to 2018, the share of China and India increased by +23% and +2.6% percentage points, while Japan (-2.5 p.p.) saw their share reduced. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, China ($2.1B) remains the largest amine-function compounds supplier in Asia-Pacific, comprising 64% of total amine-function compounds exports. The second position in the ranking was occupied by India ($521M), with a 16% share of total exports. It was followed by Japan, with a 11% share.

In China, amine-function compounds exports expanded at an average annual rate of +3.3% over the period from 2013-2018. The remaining exporting countries recorded the following average annual rates of exports growth: India (+1.3% per year) and Japan (-2.5% per year).

Export Prices by Country

In 2018, the amine-function compounds export price in Asia-Pacific amounted to $3,029 per tonne, picking up by 2.8% against the previous year. In general, the amine-function compounds export price, however, continues to indicate a significant downturn. The most prominent rate of growth was recorded in 2018 an increase of 2.8% year-to-year. The level of export price peaked at $3,558 per tonne in 2014; however, from 2015 to 2018, export prices failed to regain their momentum.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Japan ($4,386 per tonne), while South Korea ($2,426 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Japan, while the other leaders experienced a decline in the export price figures.

Amine Compounds Imports in Asia-Pacific

In 2018, the amine compounds imports in Asia-Pacific amounted to 1M tonnes, surging by 11% against the previous year. The total import volume increased at an average annual rate of +3.0% over the period from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed throughout the analyzed period. The pace of growth was the most pronounced in 2018 with an increase of 11% year-to-year. In that year, amine-function compounds imports attained their peak and are likely to continue its growth in the immediate term.

In value terms, amine-function compounds imports totaled $3.2B (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +2.0% over the period from 2013 to 2018; the trend pattern remained consistent, with somewhat noticeable fluctuations being recorded in certain years. The most prominent rate of growth was recorded in 2018 with an increase of 16% against the previous year. In that year, amine-function compounds imports reached their peak and are likely to continue its growth in the immediate term.

Imports by Country

In 2018, India (253K tonnes), distantly followed by Japan (162K tonnes), South Korea (147K tonnes), China (146K tonnes), Taiwan, Chinese (60K tonnes) and Singapore (54K tonnes) represented the largest importers of amine-function compounds, together comprising 82% of total imports. Indonesia (43K tonnes) held a little share of total imports.

From 2013 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by India, while imports for the other leaders experienced more modest paces of growth.

In value terms, Japan ($651M), India ($612M) and South Korea ($562M) appeared to be the countries with the highest levels of imports in 2018, together accounting for 58% of total imports.

In terms of the main importing countries, India recorded the highest growth rate of the value of imports, over the period under review, while imports for the other leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the amine-function compounds import price in Asia-Pacific amounted to $3,152 per tonne, rising by 4.4% against the previous year. Overall, the amine-function compounds import price, however, continues to indicate a mild deduction. The most prominent rate of growth was recorded in 2017 an increase of 5.1% against the previous year. The level of import price peaked at $3,315 per tonne in 2013; however, from 2014 to 2018, import prices stood at a somewhat lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was Japan ($4,019 per tonne), while Singapore ($2,129 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by South Korea, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform