2020 Navigator - China Report

Navigator 2020 survey: Over 80% of businesses in mainland China are positive about the outlook of international trade in the next 2 years

The Navigator survey is conducted on behalf of HSBC by Kantar. A total of 40 markets were surveyed between September and October 2020, covering Asia, Europe, North America and the Middle East. The report is compiled from responses by decision-makers at over 10,000 businesses, including 1,000 in mainland China.

Navigator 2020 survey: Over 80% of Chinese companies have a positive outlook for international trade over the next 1-2 years; Almost all Chinese companies are bolstering their supply chains; They will continue to invest in technologies as a priority; Mainland China has replaced the US to become the top market for businesses in APAC.

Despite lack of effective control over Covid-19 globally and uncertainties in the world economy, 80% of Chinese companies remain buoyant over international trade in the next 2 years, higher than the global average. Additionally, more Chinese companies plan to increase trade with APAC markets.

By region, APAC, Europe and North America remain priority destinations for Chinese businesses to expand globally in the next 3-5 years. In particular, over 40% rate APAC as their foremost destination, higher than other regions. By single market, Japan (16%) has just overtaken the US (11%) in importance to become the top trading partner for Chinese companies. Findings also show that mainland China (18%) has topped the US (16%) as the No.1 trading market for businesses in APAC.

Businesses in mainland China are cautiously optimistic about their overall business prospect. Although the proportion of Chinese companies expecting sales to grow in the next year has declined from 86% in 2019 to 62% in 2020, they expect their profitability to recover slightly faster than that of their peers globally. Close to 80% of Chinese businesses expect to return to pre-COVID profitability levels by the end of 2022.

67% of Chinese businesses intend to increase investment in their business in the next year. Immediate investment priorities for 2021 are expansion into new markets, product innovation and sales channels. Technology remains an investment priority for most Chinese businesses. According to the survey, 80% of Chinese companies are either increasing or maintaining investment across different technologies. They plan to focus particularly on technologies that facilitate product and service innovation, target new customers and improve speed to market.

The biggest concerns for Chinese companies are supply chain stability, suppliers that are too distant from their customers, and increasing costs. To alleviate these concerns, almost all companies have made changes to their supply chain over the last year. Chief among them are supply chain diversification, increased digitisation and improved transparency.