New Articles

American and Chinese Consumers are Shopping Like There’s No Trade War

shopping

American and Chinese Consumers are Shopping Like There’s No Trade War

What Trade War?

If shoppers are worried about the U.S.-China trade war, it’s not showing up yet in measures of their buying confidence or holiday retail sales.

We are more than a year into dueling tariffs between the United States and China, and we know that tariffs add costs to supply chains, but how much of those costs are passed on the consumer depends on decisions by manufacturers, buyers and retailers as well as the “import-intensity” of the products we buy.

So far, if prices have risen on consumer products, it’s not dampening American appetites to buy. And Chinese consumers don’t rely to a great degree on imports in general, so China’s retaliatory tariffs on U.S. imports don’t appear to be the biggest factor in their personal spending either.

Spending and the U.S. Economy

At the end of the third quarter, the Bureau of Economic Analysis reported that U.S. consumer spending was on track for $14.67 trillion this year, reaching an all-time high.

Personal expenditures make up 68 percent of the U.S. economy, and it’s consumer spending that’s keeping growth of our economy from slowing further. (By comparison, our “negative net exports” or total exports minus total imports, comprise five percent of U.S. GDP.)

Two-thirds of spending is on services such as housing and health care, which are largely impervious to the trade war. The remaining third is spent on non-durable goods such as clothing and groceries, and on durable goods such as cars and appliances.

Brimming with Confidence

The Conference Board’s Consumer Confidence Index is a monthly report on consumer attitudes and buying intentions. Despite analysts’ expectations that concerns related to trade disputes would cause U.S. consumers to become cautious, the index shows a trend of rising consumer confidence since 2009.

Breaking Records Online

Retail sales figures tell us whether that confidence is translating into spending. Indeed, American consumers are still filling their real and virtual shopping carts to the brim.

According to the National Retail Federation (NRF), more than 165 million people were expected to shop over the five-day Thanksgiving holiday weekend. Online sales for last holiday weekend are already being reported and appear to be breaking records.

Americans spent $7.4 billion online on Black Friday, up 19.6 percent from last year. We spent another $3.6 billion on Small Business Saturday, up 18 percent from last year. And while surfing from our desks at work, Americans spent $9.2 billon on Cyber Monday, up 16.9 percent from last year. More than half of Americans surveyed by NRF said they start their holiday shopping the first week of November. Online sales for November came in at a whopping $72.1 billion.

Chinese Consumers Outspent Us All

Cyber Monday is so successful in driving online sales in the United States that Canada, the UK and Germany have all adopted Cyber Monday to kick off their holiday shopping seasons. Australia launched “Click Frenzy” day. The Netherlands’ equivalent is linked to the December 5 Sinterklaas holiday.

But hands down, the world’s largest 24-hour online shopping day goes to China’s Singles Day held on November 11 annually. This year, Chinese online shoppers bought $38.3 billion on Singles Day alone. Think of it this way – that’s more than $1 billion every hour.

This is not a one-day phenomenon. If you were to overlay China’s consumer confidence index with that of the United States, they would look similar. Despite being slightly lower for China and with a dip in 2016 that we didn’t see in the United States, consumer confidence rose between 2014 and remained high in 2019, trade war notwithstanding. In mid-2019, retail spending in China surpassed retail spending in the United States for this first time.

Retail Spending in China Exceeds US

Beyond the Tariff Headlines

Financial analysts are watching China’s consumer spending carefully amidst the trade war. Many said this summer’s drop in car purchases was a harbinger that shoppers are growing wary, but the slowdown also coincided with the end of big discounts. Others say retail sales actually underestimate the strength of China’s overall consumer spending because those numbers offer just a partial picture of personal spending on goods and services, which include large expenditures on healthcare, education and leisure activities.

For this reason, some prominent Chinese investors are nonplussed by the Trump Administration’s tariffs. They look at a decline in certain manufacturing and exports as a structural shift in China’s economy – an “economic rebalancing” – that began long before the current trade war. In their view, household consumption will drive most of China’s future economic growth, and China’s consumer spending is not very dependent on imports.

According to World Bank data, consumer imports comprise just 13 percent of China’s overall imports. Most of the large multinational consumer goods companies now produce in China for the Chinese consumer. According to McKinsey analysis, across key consumer categories including personal digital devices and personal care products, Chinese brands have become credible competitors to foreign brands, acquiring greater market share – and shielding Chinese consumers from tariffs on U.S. imports.

Consumer Spending to Play Bigger Role in China’s Growth

Consumption is playing a much larger role in China’s economic growth than just a few years ago. In 2011, consumer spending accounted for less than 50 percent of China’s GDP growth. Last year, it accounted for 76 percent of GDP growth, outpacing both manufacturing investment and exports.

In fact, China’s total exports of goods and services as a percentage of GDP has dropped from a high of 36 percent in 2006 to 19.5 percent in 2018, with exports to the United States at just four percent.

That why China’s central bank is also monitoring consumer sentiment. In recently released results from its biennial survey of 18,600 residents in 31 provinces, nearly 80 percent of respondents expressed caution about spending and a preference for saving.

China’s politburo has directed the government to focus on turning up the tap of consumer spending by China’s growing urban middle class and to kick-start spending in rural areas. The government already cut personal income taxes and began offering subsidies for large ticket energy-saving home appliances and energy efficient vehicles. The government is expected to announce more measures in the coming months designed to goose household spending.

WB Chart Title China Exports as % of GDP

Business is Ill at Ease

Economists worry the trade war is causing a drag on economic growth, not just in the United States and China but globally. Businesses say the trade war with its escalating tariffs is a “wild card” in their planning. Uncertainty is causing them to hold back on capital expenditures.

It’s looking less likely the United States and China will agree to a “Phase 1” trade deal by the end of the year, but even if they do, the partial deal may not be enough to restore business confidence. If businesses continue to hold back on investments and reduce inventories, it could start to negatively impact jobs and incomes. This may be particularly true in China where a larger portion of the population is dependent on manufacturing jobs.

Consumers Keep Calm and Shop On

Meanwhile, holiday shopping is in full swing. Some holiday merchandise is already subject to tariffs on Chinese imports, but the tariffs the United States plans to impose on December 15 will affect many more consumer products. If imposed, buyers and retailers will have to decide how much cost to pass on to their suppliers and consumers in the coming year.

For now, shoppers are keeping calm and shopping on with resilience. But as a last line of defense against slowing growth, their confidence can be fragile. Where the trade war is concerned, buyer beware.

____________________________________________________________

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 fourteen 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.

trade

Trade and the Impact on Imports and Exports in 2020

Significant and sustained increases in the world trade index (an index measuring the number of times the word uncertainty or its variants are mentioned in Economist Intelligence Unit (EIU) reports at a country level) should be a worry for many as “the increase in trade uncertainty observed in the first quarter could be enough to reduce global growth by up to 0.75 percentage points in 2019”[1]

In August, the US Institute for supply management[2] latest report shows a contraction in production, purchasing, and employment indices.

Ahir, H, N Bloom, and D Furceri (2019), “The global economy hit by higher uncertainty”, VoxEU.org. https://voxeu.org/article/trade-uncertainty-rising-and-can-harm-global-economy

 

Uncertainty generated from Brexit, the US-China trade war, Japan – South Korea trade wars, and general discontentment with global trend towards widening income inequality is creating a toxic mix for politicians to deal with. The irony is the conventional approach of blaming your trading partners for your problems is only likely to exacerbate a general lack of confidence and increase further uncertainty.

The current round of the G7 summit in Biarritz concluded with support “to overhaul the WTO to improve effectiveness with regard to intellectual property protection, to settle disputes more swiftly and to eliminate unfair trade practices.” In essence, it’s signaling a need to strengthen the capabilities of the WTO to act faster and more decisively in resolving disputes that are even more political than structural in nature, requiring a more multi-faceted engagement approach. Whilst this may help in the long-run, in reality, companies will have to contend with uncertainty in global trade for some time to come as well as the impacts on the real economy from these disputes.

And all of this is happening as IMO 2020 approaches, the January 1, 2020, date by which the International Maritime Organization mandates a switch to lower sulfur fuels in order to achieve an 80% reduction in sulfur emissions leading to significant cost increases in the shipping goods via ocean freight (initial estimates between 180USD – 420 USD per TEU dependent on routing, base fuel costs, carrier).

So given the significant uncertainty around global trade agreements, the increasing use of trade as a political football, the increasing costs to trade and the shortening of product lifecycles as customers want faster, newer more differentiated offerings. Is it still worth it?

Of course this is very much dependent on what industry you are in. Whether you’re a global manufacturer or a wholesaler sourcing goods, your perspectives may be different based on investments made, sensitivity to current trade/tariff measures, customer demands, your markets, and the degree to which you are exposed to political debate and targeting.

However, I would offer that the benefits of specialization, economies of scale and unique factors of production that have underpinned global trade still exist as Adam Smith put it in 1776:

“By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?”[1]

Today this simple analogy still holds true in skills, competences, capabilities, and access to markets and insights so that over time the expectation is that trade will prevail.

While the recent outlook has been gloomy, opportunities for 2020 include a resolution to a number of ongoing disputes and a final settlement on Brexit (we hope). Additionally, the maturation in technologies such as blockchain, process automation, forecasting and demand management solutions can also offset costs associated with IMO and support greater agility in the uncertain supply-chain world that we currently live in.

Indeed, if 2019 was the year of trade uncertainty, 2020 could be a restorative year in our ability to execute global trade.

Partnering with an experienced supply chain leader will be essential to minimizing cost increases while ensuring the efficient flow of your company’s goods and services.

_____________________________________________________

[1] World Economic Forum:https://www.weforum.org/agenda/2019/07/how-trade-uncertainty-is-impacting-the-global-economy/

[2]https://www.instituteforsupplymanagement.org/ismreport/mfgrob.cfm?SSO=1

[3]Adam Smith: Wealth of nations 1776

Neil Wheeldon is the Vice Presidents Solutions, BDP International.

vietnam

Is Vietnam the Next China: Myth vs. Reality

The ongoing US-China trade war has brought a renewed urgency in recent months resulting in my crisscrossing this tiny nation from the northern capital of Hanoi to the country’s economic epicenter to the south, Ho Chi Minh City – formerly known as Saigon, and every stop in between. Once viewed as an emerging market with potential, Vietnam today is considered the hottest “go-to” sourcing destination as supply chains uproot from China and President Trump and President Xi continue to work out their disagreements.

However, despite logging thousands of miles of travel and spending days upon days conducting factory audits in the remotest corners of the country, I’ve discovered Vietnam’s manufacturing industry and export products may not live up to the hype as China’s best alternative.

Myth #1: Vietnam manufacturing is on par with China.

One striking difference I noticed immediately is that Vietnam’s manufacturing is at least 10-15 years behind China. On my factory tours, I witnessed outdated machinery, lack of modern equipment and saw few signs of the latest supply chain best practices, including LEAN certification standards and supply chain manufacturing principles in action. In my daily research on vetting manufacturers, I consistently come across poorly designed websites- if I am lucky to find one at all, sales pages listing professional contacts using Gmail and Yahoo accounts, and often encounter few staff members who can converse or speak English well. These deficiencies contribute to the challenging task of sourcing products meeting global export standards.

Myth #2: Vietnam’s pricing is cheaper than China.  

With labor about one-third of China, the cost of living and land is much cheaper than its northern neighbor, many falsely believe that Vietnam-made products automatically translate into big savings.

There are three contributing factors:

1. In nearly every industry, Vietnam lacks quality raw materials and must import them from China, thereby, increasing costs

2.  As new foreign direct investments set record highs, industrial park land costs have increased dramatically to coincide with this boom

3. Manufacturers (well aware that the US-China trade war has put American buyers in a corner) have raised their prices accordingly.

These all contribute to the drowning out of any major cost savings. In my experience, several times North American buyers have responded that my Vietnam price offer is wildly off the mark and not competitive with their current China suppliers, China tariff included. 

Myth #3: In Vietnam, you can expect to find everything as in China.

In the world of manufacturing and supply chain, I constantly hear: “Just start sourcing from Vietnam.” That would be all fine and dandy assuming an apples to apples comparison, but Vietnam is anything but China. Over the past two decades, China has perfected their manufacturing and supply chains to the point of employing robotics and automation churning out sophisticated products by the millions. Just take a trip to the hugely popular Canton Fair or attend one of the hundreds of trade shows and expos throughout the year; you will find every product imaginable, in every variant and color, too.

Furthermore, China has the most up-to-date and modern infrastructure—from container ports, highways, railways, and warehouses—to deliver goods globally. In contrast, Vietnam only in recent years has started to emerge onto the manufacturing scene, known mostly for light furniture, textiles, sewing, and electronics parts. 

Exasperated by the US-China trade war, Vietnam’s manufacturing industry has been red hot, however, it’s not an equivalent replacement for China. Buyers can expect less-than-stellar quality products and choices than what China offers, met with challenging business practices and frustration due to the lack of manufacturing transparency, data, and information. While Vietnam might be a manufacturing dream destination for many of your gains, it might be just that in the end: a pipe dream. 

China

Amid US-China Trade Battle, Here is how America can Remain the World’s Strongest Economy

The Communist Party of China has laid plans for a century of unlimited Chinese power and, with it, the end of the American era. However, we still can — and must — bet big on the future of American economic power. The best antidote to China’s ambitions is to ensure America’s continued economic and technological preeminence.

Far too many strategists, investors, and policymakers accept China’s economic preeminence as an inevitable outcome, given the country’s enormous population and potential for growth.

As the business community looks toward a “partial trade deal” to unwind tariffs and reduce trade hostility between the world’s two largest economies, we must understand that non-negotiable problems in U.S.-China relations will accelerate if China closes the gap with the United States in terms of economic and technological power. With the right strategic mindset and a focus on domestic productivity, America can not only win the economic and technological contest but also turn the tide in the U.S.-China competition for global power.

China’s bid for global power is built on its economic ascendency, which is based on engagement with the United States and our allies. Chinese companies are capturing global markets and climbing the ranks of the Fortune Global 500 by taking advantage of stolen or coerced foreign intellectual property and state-orchestrated market distortions. The Communist Party is converting China’s technological power into a dystopian surveillance state and a military that is focusing its capabilities on the United States and our partners.

Chairman Xi Jinping calls regularly for Chinese forces to “prepare to fight and win wars,” while converting civilian industrial technology into military power through “civil-military fusion.” Meanwhile, China’s current account surplus is employed for global influence, buying “strategic partners” with intercontinental projects like the “Belt and Road Initiative” and state-backed acquisitions of foreign firms.

U.S.-China competition is likely to be the hardest geopolitical contest in generations — but it is a contest that the United States can win if we focus on the right objectives.

The People’s Republic of China is a challenge to America’s values and concept of world order. U.S.-China competition is likely to be the hardest geopolitical contest in generations — but it is a contest that the United States can win if we focus on the right objectives. So, where do we go from here?

Focus on GDP

The first step must be a focus on accelerating U.S. productivity growth. U.S. productivity growth need only increase from 1.3 percent a year to 2.5 percent for U.S. GDP to remain ahead of China’s for the entirety of the 2020s, the decade in which many expect China’s economy to surpass America’s.

By 2030, economic leadership will be easier to maintain as China’s demographic problems set in. Such a productivity increase is realistic, given that productivity growth from 1995 to 2008 was higher than 2.5 percent.

Protect America’s edge

The second step is to preserve our edge in advanced and emerging technologies. America must remain ahead of Communist China, not only in hard sciences, but also in the actual production of advanced goods and services.

If America competes against China only through soybean and oil production, we will fail to counter China in advanced industries such as robotics, semiconductors, aerospace and biopharmaceuticals. China is gaining in these and other technologies and industries and could eventually have a decisive advantage over the United States.

As Alexander Hamilton warned 200 years ago, America can’t be great if it is a “hewer of wood and drawer of water.” We must out-invent and outproduce China in advanced technology and industrial goods.

Maintaining U.S. advantage will require collaboration between government and corporations towards national goals in science, engineering and industry. This approach has long served our nation in times of international struggle and led to lasting commercial and national security breakthroughs.

New and Big

In order to attain these goals, Washington must think new and big. New in the sense of a bipartisan consensus that productivity growth and technological competitiveness must be national priorities.

Big in the sense of big and bold proposals. Here are three: First, implement a robust research, development and investment tax credit that will stimulate innovation and investment on American soil. Second, establish a series of well-funded “moonshot” goals to ensure American leadership in emerging industries such as advanced robotics and quantum computing. Third, develop a national productivity strategy that will take the best ideas of government and industry and focus on building the next $10 trillion in annual U.S. GDP by 2030.

Half a century ago, under the leadership of President John F. Kennedy, America faced a Communist superpower that believed that it would “bury” the United States, much as Chinese Communist leaders today believe that the 21st century belongs to China. Kennedy reminded us then that America would “bear any burden” and “meet any hardship” to prevail in that consequential time.

In the end, it was the power of the American economy, the power of American technology, and the power of American industry that brought victory over our ambitious foe. We must unleash these forces once again, wrestle them into national service, and build on toward the greater good — an American era that can and must prevail.

__________________________________________________________________

Dr. Jonathan D.T. Ward is the author of “China’s Vision of Victory” and founder of Atlas Organization, a strategy consultancy on US-China global competition. Follow him on Twitter @jonathandtward

Dr. Robert D. Atkinson is the president of the Information Technology and Innovation Foundation and the author of “Big is Beautiful: Debunking the Mythology of Small Business.” Follow him on Twitter @robatkinsonITIF..

This article originally appeared on FoxBusiness.com. Republished with permission. 

trade

How U.S. Trade Policies are Speeding the Development of a Multi-Polar Global Economy

Several years in to the multi-front trade conflict led by the current U.S. administration, the world economy teeters on the edge of a possible recession.  The International Monetary Fund (IMF) estimates that up to $700 billion in global trade could be wiped off the books by the end of next year due to the trade war.  Much of the direct loss, of course, is tied to reduced trade between the U.S. and China, but other trading regions, such as the rest of Asia and Europe, are impacted by this global slowdown.  How is this shaping future trade flows?

Of course, there are some immediate winners in this tussle between the two economic giants.  Countries such as Mexico and Vietnam have seen sharp increase in trade as businesses scramble to find new production sites that would allow them to duck tariffs. Hidden behind these headlines, however, is perhaps a more important story; the rapid development of a multi-polar global economy.

Observers wringing their hands over the U.S.-China trade dispute may have missed what else is going on in the world.  Europe has been negotiating trade agreements at a rapid clip, finalizing deals with Canada, Japan, Singapore, Vietnam, several African regions and South America (MERCOSUR) over the last three years.  Africa is launching the Africa Continental Free Trade Area (AfCFTA), a 54-nation trade block that is hoped will dramatically increase inter-African trade. After a snub from the U.S., the Trans-Pacific Partnership (TPP) was retitled the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and is now an active free trade area among 11 partner nations.  Asian countries are considering a 16-nation trade pact called the Regional Comprehensive Economic Partnership (RCEP).  In brief, world leaders are not sitting on their hands waiting for the U.S.-China dispute to get resolved.  They are seizing opportunities to trade elsewhere.

World demographics make this multi-polar trading system inevitable.  Despite the United States’ tremendous economic power, it represents less than five percent of the world population. Although it is a wealthy sliver of the overall market, that means that 95% of the world’s consumers still reside elsewhere.  Over the next few decades, rapid population growth in Asia and Africa will continue to change these market numbers, with 79% of the world’s consumers residing in Africa or Asia by 2050. The global middle class will continue to grow outside of ‘traditional markets’ and by 2030, over half of the world population will be considered middle class.  Some estimates suggesting that over 90% of future middle class growth will come in Asia and Africa. 

This dramatic surge in wealth and consumer spending power outside of Europe, the U.S. and Japan demands more infrastructure to support logistics.  China’s initiatives to help itself carve out a primary role in developing these new markets through the Belt and Road program are well known, but Europe has also jumped into the seize a piece of the action, especially in Africa, and programs to upgrade infrastructure at the state level are fueling building from South America to the Philippines. 

It’s my expectation global trade will become even more fragmented over the next decades,” notes European logistics expert Louis Coenders, owner of the Dutch advising firm De Transportheker, which has been consulting on transportation, warehousing, and global distribution since 2010 and has stressed to clients the growing importance of diversity in logistics as the world becomes multipolar.  “You cannot rely on one single source. From a risk management perspective, it’s never smart to put all your eggs into one basket. That also applies to international trade.”  Coenders further noted that the growing middle class in places like Eastern Europe, Asia and Africa will encourage infrastructure changes to bring products into these markets as consumer spending rises.  For the moment China has an edge into many of these areas, as illustrated by the first train shipments from Alibaba arriving into Liege, Belgium just last week as twice-a-week rail shipments are now sent directly from China to the EU courtesy of the improved rail system.

When the U.S. resolves its trade disputes with China (and potentially the EU, Turkey, Russia and other targets of the current administration), it will find that the unintended consequence of this long-term conflict is that the world has by necessity sped up economic exchanges, and adjusted trading systems and flows to accommodate this new multi-polar world.  While some of the trade may ‘come back’ to the United States, the changes in world population and fast-paced creation of new free trade blocks outside of North America means that other markets will seize this opportunity to deepen their trade relations and the U.S. will find itself in a more competitive and varied trading environment. This change was inevitable, but the recent trade war has sped up its development.  Agile, strategic companies will react to this market change by diversifying and partnering with colleagues in the growing markets of Africa and Asia. Those that are slow to change will find it hard to remain competitive in this brave new trade world.

_________________________________________________________________

Kirk Samson is the owner of Samson Atlantic LLC, a Chicago-based international business consulting company which offers market research, political risk assessment, and international expansion assistance.  Mr. Samson is a former U.S. diplomat and international law advisor who lived and worked in ten different countries.

kiwi

Global Kiwi Fruit Market 2019 – New Zealand and Italy are the Leading Exporters of Kiwi Fruits

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

The global kiwi fruit market revenue amounted to $7.6B in 2018. 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).

Consumption By Country

China (2.3M tonnes) constituted the country with the largest volume of kiwi fruit consumption, comprising approx. 51% of total consumption. Moreover, kiwi fruit consumption in China exceeded the figures recorded by the world’s second-largest consumer, Italy (314K tonnes), sevenfold. The third position in this ranking was occupied by Iran (248K tonnes), with a 5.5% share.

From 2007 to 2018, the average annual growth rate of volume in China amounted to +6.1%. In the other countries, the average annual rates were as follows: Italy (+8.8% per year) and Iran (+7.8% per year).

In value terms, China ($3.9B) led the market, alone. The second position in the ranking was occupied by Italy ($529M). It was followed by Spain.

Market Forecast 2019-2025

Driven by increasing demand for kiwi fruit worldwide, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +3.9% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 5.9M tonnes by the end of 2025.

Production 2007-2018

In 2018, approx. 4.3M tonnes of kiwi fruit were produced worldwide; increasing by 4.4% against the previous year. Overall, the total output indicated a prominent increase from 2007 to 2018: its volume increased at an average annual rate of +4.8% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, kiwi fruit production decreased by -5.1% against 2016 indices. The pace of growth appeared the most rapid in 2015 when production volume increased by 15% against the previous year. The global kiwi fruit production peaked at 4.5M tonnes in 2016; however, from 2017 to 2018, production failed to regain its momentum. The general positive trend in terms of kiwi fruit output was largely conditioned by a strong expansion of the harvested area and a relatively flat trend pattern in yield figures.

In value terms, kiwi fruit production stood at $7.5B in 2018 estimated in export prices. Over the period under review, kiwi fruit production continues to indicate a prominent expansion. The most prominent rate of growth was recorded in 2008 when production volume increased by 30% against the previous year. The global kiwi fruit production peaked in 2018 and is expected to retain its growth in the near future.

Production By Country

China (2.1M tonnes) constituted the country with the largest volume of kiwi fruit production, accounting for 50% of total production. Moreover, kiwi fruit production in China exceeded the figures recorded by the world’s second-largest producer, Italy (555K tonnes), fourfold. New Zealand (437K tonnes) ranked third in terms of total production with a 10% share.

In China, kiwi fruit production expanded at an average annual rate of +5.4% over the period from 2007-2018. The remaining producing countries recorded the following average annual rates of production growth: Italy (+2.6% per year) and New Zealand (+1.1% per year).

Harvested Area 2007-2018

In 2018, the global harvested area of kiwi fruit stood at 260K ha, increasing by 5.1% against the previous year. In general, the total harvested area indicated a resilient expansion from 2007 to 2018: its figure increased at an average annual rate of +4.7% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, kiwi fruit harvested area decreased by -6.7% against 2016 indices. The pace of growth was the most pronounced in 2013 when harvested area increased by 29% year-to-year. Over the period under review, the harvested area dedicated to kiwi fruit production reached its maximum at 279K ha in 2016; however, from 2017 to 2018, harvested area stood at a somewhat lower figure.

Yield 2007-2018

Global average kiwi fruit yield totaled 16 tonne per ha in 2018, stabilizing at the previous year. Over the period under review, the kiwi fruit yield, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2014 with an increase of 11% y-o-y. Over the period under review, the average kiwi fruit yield reached its peak figure level at 17 tonne per ha in 2008; however, from 2009 to 2018, yield failed to regain its momentum.

Exports 2007-2018

In 2018, the global exports of kiwi fruit stood at 1.4M tonnes, waning by -2.4% against the previous year. The total export volume increased at an average annual rate of +1.7% from 2007 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed over the period under review. The pace of growth appeared the most rapid in 2015 when exports increased by 22% against the previous year. The global exports peaked at 1.7M tonnes in 2016; however, from 2017 to 2018, exports remained at a lower figure.

In value terms, kiwi fruit exports amounted to $2.8B (IndexBox estimates) in 2018. In general, the total exports indicated a remarkable expansion from 2007 to 2018: its value increased at an average annual rate of +1.7% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, kiwi fruit exports increased by +34.1% against 2014 indices. The pace of growth appeared the most rapid in 2008 with an increase of 26% y-o-y. The global exports peaked in 2018 and are expected to retain its growth in the near future.

Exports by Country

New Zealand (417K tonnes) and Italy (289K tonnes) were the key exporters of kiwi fruit in 2018, resulting at near 29% and 20% of total exports, respectively. Chile (183K tonnes) held the next position in the ranking, followed by Greece (135K tonnes), Belgium (109K tonnes) and Iran (93K tonnes). All these countries together took near 36% share of total exports. Germany (31K tonnes) followed a long way behind the leaders.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Iran, while the other global leaders experienced more modest paces of growth.

In value terms, New Zealand ($1.2B) remains the largest kiwi fruit supplier worldwide, comprising 42% of global exports. The second position in the ranking was occupied by Italy ($518M), with a 18% share of global exports. It was followed by Belgium, with a 11% share.

From 2007 to 2018, the average annual rate of growth in terms of value in New Zealand stood at +7.0%. In the other countries, the average annual rates were as follows: Italy (+2.3% per year) and Belgium (+2.2% per year).

Export Prices by Country

The average kiwi fruit export price stood at $1,994 per tonne in 2018, growing by 3.8% against the previous year. Over the last eleven years, it increased at an average annual rate of +3.2%. The most prominent rate of growth was recorded in 2014 when the average export price increased by 22% y-o-y. Over the period under review, the average export prices for kiwi fruit attained their maximum in 2018 and is likely to see steady growth in the immediate term.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was New Zealand ($2,885 per tonne), while Iran ($1,015 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Iran, while the other global leaders experienced more modest paces of growth.

Imports 2007-2018

In 2018, the amount of kiwi fruit imported worldwide totaled 1.7M tonnes, picking up by 3.9% against the previous year. The total import volume increased at an average annual rate of +3.6% over the period from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The pace of growth appeared the most rapid in 2015 with an increase of 17% year-to-year. The global imports peaked in 2018 and are likely to continue its growth in the near future.

In value terms, kiwi fruit imports stood at $3B (IndexBox estimates) in 2018. In general, the total imports indicated a buoyant increase from 2007 to 2018: its value increased at an average annual rate of +3.6% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, kiwi fruit imports increased by +47.9% against 2013 indices. The most prominent rate of growth was recorded in 2008 when imports increased by 23% year-to-year. The global imports peaked in 2018 and are likely to continue its growth in the immediate term.

Imports by Country

Spain (221K tonnes), China (182K tonnes), Belgium (156K tonnes), Japan (106K tonnes), Germany (96K tonnes), the Netherlands (79K tonnes), France (78K tonnes), Russia (72K tonnes), the U.S. (69K tonnes), Italy (48K tonnes), Taiwan, Chinese (42K tonnes) and South Korea (33K tonnes) represented roughly 72% of total imports of kiwi fruit in 2018.

From 2007 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by China, while the other global leaders experienced more modest paces of growth.

In value terms, Japan ($371M), China ($369M) and Spain ($285M) were the countries with the highest levels of imports in 2018, together accounting for 34% of global imports.

Among the main importing countries, China experienced the highest growth rate of imports, over the last eleven-year period, while the other global leaders experienced more modest paces of growth.

Import Prices by Country

The average kiwi fruit import price stood at $1,806 per tonne in 2018, picking up by 4.3% against the previous year. Over the period from 2007 to 2018, it increased at an average annual rate of +2.1%. The pace of growth appeared the most rapid in 2008 when the average import price increased by 18% against the previous year. The global import price peaked at $1,875 per tonne in 2014; however, from 2015 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 ($3,493 per tonne), while Russia ($1,070 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Taiwan, Chinese, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

SMEs

HOW TO EXPORT TO THE UNITED STATES: 6 SIMPLE STEPS FOR SMEs

According to the Organization for Economic Cooperation and Development, International Trade Statistics 1, participation in exports remains largely led by large enterprises (250 or more employees) in industrialized countries. In developing countries, the story is the same, and only a small percentage of small and medium sized businesses export at all. The World Trade Organization (WTO) reports that SMEs in developing countries make up roughly 45%, on average, of a country’s Gross Domestic Product (WTO, 2016), but SMEs’ exports represent on average 7.6 per cent of total manufacturing sales, compared to 14.1 per cent in the case of large manufacturing firms (WTO, 2016).

If you want your small or medium-sized business to get a piece of the export pie, according to the OECD Trade Committee, there are a number of challenges to be overcome. These include everything from limited access to credit, insufficient use of technology, and lack of export experience, to border controls. The most significant challenge posed, remains learning the ins and outs of getting your product from your country to foreign markets in a cost effective manner. These tips can help your small business become better equipped to enter the exciting world of exports.

The first stage in export planning is to investigate the market and identify your reasons for exporting to customers.
First, determine demand. You need to know where in the U.S. your product is needed. If you sell bathing suits, better export to Florida and California than to Nebraska or Alaska.

Second, you’ll need access to buyers. Start with researching buyers on the Internet, use your local U.S. Chamber of Commerce as a first resource, followed by the Economic Officer in the U.S. Embassy or Consulate in your country. Then, watch for upcoming trade shows where your goods could be featured.

Next, either start selling directly on your own ecommerce platform (secure payment and delivery systems should be integrated), or build a relationship with an international trade agent, whom you trust to help you navigate state and city markets, regulations, and opportunities for you to sell your goods in the U.S. , either to wholesale distributors, or directly to retailers. Improved logistics channels, eCommerce, and free trade agreements make that possible.

Third, find out what, if any, tariffs or exemptions exist for your goods. If there are no trade agreements between your country and the U.S., exempting your goods from tariffs, you’ll need the help of a U.S. licensed Customs Broker. A U.S. Customs Broker will be familiar with the Harmonized Tariff Schedule of the United States (“HTSUS”), and help you classify your goods and determine the tariffs you’ll have to pay to the U.S. Customs and Border Patrol, before your goods can enter the United States.

The National Customs Brokers and Freight Forwarders Association of America can easily provide brokers in the state or region you’re targeting.

Fourth, once you’ve got a better understanding of your profit margin to determine how you’ll sell your goods in the export market, you may wish to consider how to potentially mitigate any risks that can occur while your goods are being shipped, or once your goods arrive at their destination and are with the buyer(s). There are payment risks, damage or destruction of goods risks, documentary risks with customs, and many others.

You may have access to a good trade and customs attorney in the originating country, but he or she may not be thoroughly familiar with U.S. trade compliance requirements. In that case, you may benefit from consulting with a U.S. international trade lawyer to learn how they can help you mitigate risks in exporting by intervening with customs on your behalf, managing disputes through a properly drafted contract, and putting you in touch with relevant agents for information on U.S. trade insurance and compliance with government regulations.

In the U.S., generally, a phone or email consultation with a reputable lawyer would be free. If they want you to pay to talk with them for a few minutes about your problem and find out if they can help you, then hang up and call another lawyer.

Fifth, you need to build a relationship with a reputable freight forwarder or consolidator, who will help you decide: whether to ship by air or by sea; what documents are required for the country you are exporting to; how to pack your products for shipment; label them, and insure them. Normally, the freight forwarder will take care of it all, for a premium, but beware of INCOTERMS (regulations that define the responsibilities of buyers and sellers involved in commercial trade).

You must have at least a basic understanding of them to comprehend the shipping documents your freight forwarder will have you sign, and to protect your rights and limit liability.

Sixth, yes exporting is exciting, but it’s also risky doing business across oceans and continents with buyers you don’t know and may never see. To that end, there are many export resources in the originating country that companies, small and large, can benefit from. Usually Chambers of Commerce are a good starting point. There are associations of American Chambers of Commerce in every region of the world; just check the American Chamber of Commerce online directory for the specific one in your region or country.

Your own government’s resources can usually also offer invaluable information and global networks, including relevant contacts in the U.S. This is particularly helpful if you have a problem that can be fixed by your government seeking the intervention of commercial or economic officers at the local U.S. embassy in your country (keep in mind though that the Embassy is meant to assist U.S. citizens and residents, not foreigners).

Further, your local manufacturers association(s) may have members who have exported in the past, and can share their expertise. Lastly, commercial banks and local Export-Import Banks can guide you on how to leverage export financing, and minimize your financial exposure, when transacting business with foreign buyers.

Against this backdrop, you can reduce the external challenges SMEs face in trading, and better manage the uncertainty inherent in doing business internationally, all while making a healthy profit and expanding to new markets.

Magda Theodate is an international trade attorney and Director of Global Executive Trade Consulting Ltd. She works as a senior consultant for international development agencies in lower and middle income countries, resolving project execution challenges affecting trade, procurement and governance. To learn more, please visit: www.globalexecutivetrade.com

soybean

Soybean Prices are a Proxy for How the Trade War is Going

Soybeans are in your cereal, candles, crayons and car seats

Soybeans have more far uses than most of us realize. After harvesting, soybeans are dehulled and rolled into flakes as its oil is extracted. Soybean oil has become an ingredient ubiquitous in dressings, cooking oils and many foods, but is also sold for biodiesel production and other industrial uses.

Soy flours feature prominently in commercial baking. Soy hulls are part of fiber bran cereals, breads and snacks. Soybeans are even part of building materials, replacing wood in furniture, flooring and countertops. They are in carpets, auto upholstery and paints. Soybean candles are popular because they burn longer with less smoke. Soy crayons are non-toxic for children. And – because soybeans are high in protein – they are a major ingredient in livestock feed, which provides much of the impetus for globally traded soybeans.

Bean counting

Given this panoply of applications, it should be no surprise that global demand for soybeans is growing, but it’s mostly animal mouths we are feeding. Demand for soybean meal for livestock feed drives two-thirds of the export value of traded soybeans.

According to the Agricultural Market Information System, three countries produce 80 percent of the world’s soybeans to fill this demand: the United States, Brazil and Argentina.

At 123.7 million metric tons produced in 2018, U.S. farmers accounted for 34 percent of world production. Brazil’s farmers yielded 117 million metric tons, accounting for 32 percent of world production, but Brazil exported larger volumes than the United States.

Rounding out the top three, Argentina accounts for 15 percent of world production but exported just 6.3 million metric tons in 2018. China is fourth, producing 15.9 million metric tons in 2018 – just four percent of world production.

America’s second largest crop

Grown on more than 303,000 farms across the United States, soybeans are the second largest cash crop for American farmers. Conventional soybeans are grown in 45 U.S. states while high oleic soybeans are grown in 10 states. Though output varies each year, at 4.54 billion bushels in 2018, U.S. growers are so productive they can now yield twice as many bushels of soybeans as two decades ago. (At SoyConnection.com, you can click on this map to see the number of farms, acres, and bushels produced in each state.)

Three countries produce 80 percent of the world's soybean

China’s insatiable appetite

China cannot get enough soybeans. When China entered the WTO in 2001, the country was already consuming 15 percent of the world’s soybeans, driving 19 percent of global trade in soybeans. By 2018, China’s appetite had grown 815 percent according to the U.S. Farm Bureau, which says China’s demand now supports 62 percent of world trade in soybeans.

According to the Farm Bureau’s calculations, China consumes one-third of every acre harvested in the world – an amount equivalent to or more than total U.S. soybean acreage. Around 60 percent of U.S. yields were sold to China in 2017, which means there was a lot at risk for U.S. farmers caught in the crosshairs of the trade war that unfolded in 2018.

A pawn in the trade war

In July 2018, the United States fired the first tariff shot in its efforts to seek redress for the intellectual property theft cited in its Section 301 investigation into China’s practices, by imposing tariffs on $34 billion worth of China’s imports. China responded with 25 percent tariffs on an equivalent amount, including on soybeans from the United States. The tariff has remained in place as leverage in the trade war – a proxy for whether China perceives progress is being made or not in the negotiations.

In intermittent gestures of goodwill, China agrees to make purchases but has often not fulfilled orders for the promised amounts. When President Trump angrily tweeted on August 23 this year that China was not negotiating in good faith and that U.S. tariffs would cover more imports from China, China responded in part by adding five percent to its tariffs on soybeans.

A factor in price fluctuations

The Food and Agricultural Policy Research Institute at the University of Missouri recently offered a gloomy forecast for lower prices for soybeans: $8.43 per bushel for 2019-20, dropping further to $7.94 per bushel for the 2020-21 marketing years. They say lower prices are resulting from a combination of adverse weather, African swine fever disease that is decimating herd inventories throughout Asia and therefore weakening demand for feed – and the ongoing trade dispute.

On May 13 this year, coincident with some fiery presidential tweets expressing frustration with China, soybean prices reached a 10-year low. USDA estimates that, at 4.54 billion bushels produced last year, a drop in average price per bushel from $9.33 in 2017 to $8.60 in 2018 translates to losses for U.S. soybean farmers of $3.3 billion.

Soybean Prices react to China trade war

Bait and switching

Adding to the strain of lower prices, China has drastically pared back its soybean orders from the United States. In 2016, the United States shipped 36.1 million metric tons of soybeans to China. In 2018, sales dropped to just 8.2 million metric tons.

The Chinese government is able to avoid its own tariffs by directly purchasing U.S. soybeans which it then sells to private users in China. The government has also granted tariff exemptions to Chinese soybean crushers. Just this week, the government granted an exemption to state-owned, private and international companies to import 10 million metric tons of U.S. soybeans tariff-free. Overall, the quantities purchased through these mechanisms is not nearly enough to make up for the vast shortfall in supply from the United States.

So, China is buying more from Paraguay, Uruguay, Argentina, Canada and in particular from Brazil, which has moved in to supply 75 percent of China’s total imports. For U.S. soybean exporters, lower prices per bushel have attracted new buyers from Europe, Mexico and elsewhere, but those sales are not enough to replace lost sales in China.

Plummeting U.S. Soybean Exports to China

Homegrown

China is hedging its bets by rejiggering the incentives it provides to its own farmers. Upon releasing a new white paper, the head of the National Food and Strategic Reserves Administration said that even though China’s food production and reserves are strong, “We must hold the rice bowl firmly in our hands, and fill it with even more Chinese food.”

In addition to directly investing in agricultural infrastructure in Brazil, neighboring Russia, and other suppliers, the Chinese government has set a goal to increase domestic soybean production in five years from 16 million to 24 million metric tons, according to the U.S. Soybean Export Council.

News China reported in January that Chinese farmers in Heilongjiang, China’s main grain producing province, are being provided incentives to switch from wheat and corn to planting more soybeans. For years, the Chinese government has offered price supports for corn. Under new policies, crop rotation can earn Chinese farmers $322 per hectare in subsidies in addition to subsidies of between $373 and $430 per hectare offered by provincial authorities.

The Ministry of Science and Technology is also supporting trials of hybrid soybean seeds that are more weather-resistant and could more than triple the average yield for soybeans grown in China.

China's Soybean Journey

Long term disruptions

It’s possible the United States and China will ink a partial deal in the coming weeks that provides relief for American soybean farmers.

The American Soybean Association says it is “hopeful this ‘Phase 1’ agreement will signal a de-escalation in the ongoing U.S.-China trade war… rescinding the tariffs and helping restore certainty and stability to the soy industry.”

China has reportedly promised to purchase $40 billion to $50 billion in U.S. agricultural goods, which would be scaled up annually. That would be double the $24 billion China spent on American farm goods in 2017.

When seeds are in the ground, the acreage is committed, but as American farmers wait and watch the trade war, they are surely thinking about how to plant around these disruptions in outer growing years.

Over the last year, some reliable overseas customers are buying up stocks of U.S. soybeans that would otherwise have gone to China and some new customer relationships are being forged in emerging markets such as Egypt, Bangladesh, Pakistan and Southeast Asia.

When the tariffs are permanently removed, it will remain to be seen whether trading patterns will also have permanently shifted.

__________________________________________________________________

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 fourteen 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.

Japan

Japan Mini-Deal A Victory for U.S. Agriculture?

Many American farmers and ranchers breathed a sigh of relief when the United States and Japan formally signed a U.S.-Japan Trade Agreement in September. Billed as the first phase of a more comprehensive trade deal, the Agreement establishes standards to promote digital trade and provides Japanese exporters with improved market access for certain industrial products. In return, Japan agreed to slash tariffs on a wide range of food and agriculture exports – a key outcome for the U.S. agriculture community.

For U.S. agriculture producers struggling with a weak farm economy and uncertainty in global markets, implementation of the Agreement cannot come soon enough. Japan consistently ranks as one of the top export markets for agriculture and food, soaking up over $14.5 billion worth of goods in 2018. But farm groups have been ringing alarm bells ever since the United States withdrew from the Trans-Pacific Partnership (TPP) that would have provided them access to the Japanese market sooner.

Japan top market for U.S. beef

U.S. competitors get a head start

Walking away from the TPP meant that U.S. producers were not eligible to enjoy the tariff cuts Japan adopted under that agreement. Instead, the benefits of improved market access flowed to key U.S. competitors, including from Canada, Australia and New Zealand, as those countries remained under the TPP framework. On top of that, the European Union (EU) landed its own trade deal with Japan that provided European farmers and ranchers with favorable export terms. Taken together, these various agreements put the United States at a serious disadvantage. While Japanese tariffs on foreign agricultural products continued to fall, the United States was stuck paying higher tariff rates, raising the overall cost of U.S. exports relative to competitors.

The U.S. Department of Agriculture captured this dynamic in a report it released late last year on beef exports to Japan. Without a trade agreement, U.S. beef exporters were forced to pay the “Most Favored Nation (MFN)” applied tariff rate of 38.5 percent. Not only were the tariffs paid by European beef exporters (“JAEPA” in the chart below) and by members of the TPP (“CPTPP” in the chart) considerably lower, the tariffs are scheduled to continue dropping over the next 15 years. The widening gap would render U.S. products even less attractive with each passing year.

Japan tariff reduction schedule for beef chart

U.S. strikes a “mini-deal” to catch up

Recognizing the dangers for beef and other U.S. agricultural commodities facing a similar future, the Trump Administration moved to strike a partial free trade agreement with Japan that would level the playing field for U.S. products. Stage one of the U.S.-Japan Trade Agreement mostly achieves that goal by lowering the tariff rates Japan applies to over 90 percent of U.S. agricultural goods, seeking to match Japan’s commitments under TPP.

However, U.S. agricultural producers are not completely out of the woods. That is because the TPP – like most modern trade agreements – included more than just tariff reductions. It also covered a broad range of regulations impacting agricultural trade including customs procedures and product safety approvals. The United States and Japan did not address these so-called “technical barriers to trade” in the first phase of their bilateral agreement.

Awaiting “stage two”

Both U.S. President Trump and Japanese Prime Minister Shinzo Abe have committed to working towards a more comprehensive agreement. The Administration’s U.S.-Japan bilateral negotiating objectives outline goals for every sector of the economy. That should give hope to U.S. agriculture groups, especially rice growers and dairy producers who are still seeking improved market access to Japan. U.S. industrial goods manufacturers, many of whom are eyeing the Japanese market, will be just as eager to see a comprehensive deal in the near future.

U.S. agricultural products left out of Japan mini-deal

The obvious risk is that a comprehensive deal never materializes. The annals of history (and recent memories) are filled with examples of derailed international negotiations. A pending U.S. decision on whether to impose tariffs on Japanese automobiles and parts, for example, could easily send the trade winds blowing in another direction. In addition to disappointing U.S. business groups, failure to land a full agreement could run afoul of World Trade Organization (WTO) rules, which plainly state that trade agreements must cover “substantially all trade.”

Nonetheless, after the year farmers have had, the initial U.S.-Japan Trade Agreement is still a deal worth celebrating.

________________________________________________________________

 

Max Moncaster is an Associate Director at the National Association of State Departments of Agriculture, where he focuses on trade and natural resource issues. He has served in trade policy and advocacy roles for public and private sector organizations since 2014.

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

 

beeswax

Asia’s Beeswax Market Is Estimated at $206M in 2018, an Increase of 3.4%

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

The revenue of the beeswax market in Asia amounted to $206M in 2018, increasing by 3.4% 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). The total market indicated a moderate increase from 2007 to 2018: its value increased at an average annual rate of +0.7% over the last eleven years.

Consumption By Country in Asia

The country with the largest volume of beeswax consumption was India (26K tonnes), accounting for 64% of total consumption. Moreover, beeswax consumption in India exceeded the figures recorded by the region’s second-largest consumer, Turkey (4.9K tonnes), fivefold. The third position in this ranking was occupied by South Korea (3.7K tonnes), with a 9.1% share.

In India, beeswax consumption expanded at an average annual rate of +2.6% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Turkey (+1.9% per year) and South Korea (-1.1% per year).

In value terms, India ($127M) led the market, alone. The second position in the ranking was occupied by Turkey ($42M). It was followed by South Korea.

The countries with the highest levels of beeswax per capita consumption in 2018 were South Korea (73 kg per 1000 persons), Turkey (59 kg per 1000 persons) and Malaysia (39 kg per 1000 persons).

From 2007 to 2018, the most notable rate of growth in terms of beeswax per capita consumption, amongst the main consuming countries, was attained by Japan, while the other leaders experienced more modest paces of growth.

Market Forecast 2019-2025 in Asia

Driven by increasing demand for beeswax in Asia, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +0.2% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 42K tonnes by the end of 2025.

Production in Asia

In 2018, approx. 50K tonnes of beeswax were produced in Asia; remaining stable against the previous year. The total output volume increased at an average annual rate of +1.3% from 2007 to 2018; the trend pattern remained consistent, with only minor fluctuations being recorded in certain years. The pace of growth appeared the most rapid in 2008 when production volume increased by 5.6% against the previous year. Over the period under review, beeswax production reached its peak figure volume in 2018 and is likely to continue its growth in the immediate term.

In value terms, beeswax production stood at $292M in 2018 estimated in export prices. Over the period under review, beeswax production continues to indicate prominent growth. The growth pace was the most rapid in 2011 with an increase of 25% against the previous year. Over the period under review, beeswax production attained its peak figure level at $392M in 2014; however, from 2015 to 2018, production failed to regain its momentum.

Production By Country in Asia

India (24K tonnes) remains the largest beeswax producing country in Asia, comprising approx. 49% of total production. Moreover, beeswax production in India exceeded the figures recorded by the region’s second-largest producer, China (11K tonnes), twofold. Turkey (4.5K tonnes) ranked third in terms of total production with a 9% share.

In India, beeswax production increased at an average annual rate of +2.0% over the period from 2007-2018. In the other countries, the average annual rates were as follows: China (+0.5% per year) and Turkey (+1.4% per year).

Exports in Asia

The exports totaled 14K tonnes in 2018, surging by 8.1% against the previous year. The total exports indicated a strong increase from 2007 to 2018: its volume increased at an average annual rate of +6.7% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, beeswax exports increased by +9.1% against 2016 indices. The pace of growth appeared the most rapid in 2010 when exports increased by 26% year-to-year. The volume of exports peaked in 2018 and are expected to retain its growth in the near future.

In value terms, beeswax exports amounted to $79M (IndexBox estimates) in 2018. In general, beeswax exports continue to indicate a resilient expansion. The growth pace was the most rapid in 2010 with an increase of 34% y-o-y. The level of exports peaked at $80M in 2015; however, from 2016 to 2018, exports stood at a somewhat lower figure.

Exports by Country

In 2018, China (9.7K tonnes) represented the major exporter of beeswax, committing 69% of total exports. It was distantly followed by Malaysia (1,970 tonnes) and Viet Nam (1,494 tonnes), together committing a 25% share of total exports. India (339 tonnes) held a little share of total exports.

Exports from China increased at an average annual rate of +5.3% from 2007 to 2018. At the same time, Viet Nam (+19.6%), India (+15.2%) and Malaysia (+8.8%) displayed positive paces of growth. Moreover, Viet Nam emerged as the fastest-growing exporter in Asia, with a CAGR of +19.6% from 2007-2018. China (+30 p.p.), Viet Nam (+9.2 p.p.), Malaysia (+8.5 p.p.) and India (+1.9 p.p.) significantly strengthened its position in terms of the total exports, while the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, China ($61M) remains the largest beeswax supplier in Asia, comprising 77% of total beeswax exports. The second position in the ranking was occupied by Viet Nam ($12M), with a 15% share of total exports. It was followed by India, with a 2% share.

From 2007 to 2018, the average annual rate of growth in terms of value in China stood at +10.9%. In the other countries, the average annual rates were as follows: Viet Nam (+24.8% per year) and India (+15.5% per year).

Export Prices by Country

The beeswax export price in Asia stood at $5,595 per tonne in 2018, going up by 1.8% against the previous year. The export price indicated a buoyant increase from 2007 to 2018: its price increased at an average annual rate of +4.4% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, beeswax export price decreased by -5.3% against 2015 indices. The growth pace was the most rapid in 2012 when the export price increased by 20% y-o-y. Over the period under review, the export prices for beeswax reached their maximum at $5,910 per tonne in 2015; however, from 2016 to 2018, export prices failed to regain their momentum.

Prices varied noticeably by the country of origin; the country with the highest price was Viet Nam ($7,731 per tonne), while Malaysia ($670 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by China, while the other leaders experienced more modest paces of growth.

Imports in Asia

In 2018, approx. 5.5K tonnes of beeswax were imported in Asia; stabilizing at the previous year. Overall, beeswax imports continue to indicate remarkable growth. The most prominent rate of growth was recorded in 2010 when imports increased by 40% against the previous year. The volume of imports peaked in 2018 and are likely to see steady growth in the near future.

In value terms, beeswax imports totaled $28M (IndexBox estimates) in 2018. In general, beeswax imports continue to indicate a prominent increase. The most prominent rate of growth was recorded in 2010 when imports increased by 47% year-to-year. Over the period under review, beeswax imports reached their maximum in 2018 and are expected to retain its growth in the immediate term.

Imports by Country

India represented the major importing country with an import of around 2.2K tonnes, which resulted at 40% of total imports. Japan (889 tonnes) took the second position in the ranking, followed by China (557 tonnes), Turkey (405 tonnes) and South Korea (357 tonnes). All these countries together took approx. 40% share of total imports. Pakistan (186 tonnes), Thailand (181 tonnes) and Taiwan, Chinese (93 tonnes) followed a long way behind the leaders.

India was also the fastest-growing in terms of the beeswax imports, with a CAGR of +23.1% from 2007 to 2018. At the same time, China (+20.6%), Pakistan (+14.2%), Turkey (+9.8%), Thailand (+5.9%) and Taiwan, Chinese (+1.8%) displayed positive paces of growth. Japan experienced a relatively flat trend pattern. By contrast, South Korea (-2.4%) illustrated a downward trend over the same period. India (+36 p.p.), China (+8.9 p.p.), Turkey (+4.7 p.p.), Pakistan (+2.6 p.p.), Japan (+1.6 p.p.) and Thailand (+1.5 p.p.) significantly strengthened its position in terms of the total imports, while South Korea saw its share reduced by -2% from 2007 to 2018, respectively. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the largest beeswax importing markets in Asia were Japan ($8.2M), China ($5.5M) and South Korea ($2.9M), with a combined 60% share of total imports.

China recorded the highest growth rate of imports, among the main importing countries over the last eleven years, while the other leaders experienced more modest paces of growth.

Import Prices by Country

The beeswax import price in Asia stood at $5,033 per tonne in 2018, remaining stable against the previous year. Over the last eleven years, it increased at an average annual rate of +1.5%. The growth pace was the most rapid in 2014 when the import price increased by 35% y-o-y. In that year, the import prices for beeswax attained their peak level of $5,431 per tonne. From 2015 to 2018, the growth in terms of the import prices for beeswax remained at a lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was China ($9,919 per tonne), while India ($1,098 per tonne) was amongst the lowest.

From 2007 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