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38% of Middle East companies expand international sales during COVID-19: Study - Daily News Egypt

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38% of Middle East companies expand international sales during COVID-19: Study

50% of respondents in Middle East, 38% in Africa believe it will take less than year for global trade to recover to pre-pandemic levels

International trade flows have not declined as dramatically as expected in the wake of the novel coronavirus (COVID-19) pandemic, with 38% of Middle Eastern companies managing to expand international sales instead.

The notable figure has been published in a global study of private sector perspectives commissioned by DP World and conducted by The Economist Intelligence Unit. The report added that a total of 32% in Africa have done the same. 

It also revealed that supply chain reconfiguration has been a priority for many businesses as they work to overcome the adverse impacts of the pandemic. 

Globally, 83% of companies are reconfiguring their supply chains. From a regional perspective, the Middle East had the highest share of respondents, at 96%, of whose companies were in the process of reconfiguring their supply chains. 

In addition, 84% of African businesses answered that they were already in the process of doing so, slightly more than the global average of 83%.

The study also highlighted the impact of the pandemic with the highest share of respondents in the Middle East, at 48%. This indicated that a demand shock, defined as the difficulty in selling products to customers in international markets, had the greatest negative impact on their firms’ international sales. 

Meanwhile in Africa, the highest share of respondents (48%) indicated that a logistics shock, defined as the difficulty in arranging for transport or logistics services, had the greatest negative impact.

The report captured the perspectives of business leaders across six regions, namely North America, South America, Europe, the Middle East, Africa, and the Asia Pacific.

The research shows that, on average, companies allocated 32% of revenue from the first half (H1) of 2020 to help them switch suppliers or logistics providers and change production or purchasing locations. 

Companies in the Middle East expect to restructure their supply chains within 7.4 months, compared with 8.6 months in Africa and 8.5 months globally. 

Additionally, Middle Eastern companies are reallocating roughly 30% of their H1 of 2020 revenues to reconfigure their supply chains, which is in line with the global average of 32%. However, respondents in Africa are reallocating less, on average about 24% of their H1 of 2020 revenues. 

The data also revealed the particular sectors that helped to support international trade during the pandemic. Supported by data from the ITC, South African exports of pulp (the raw material for toilet paper) increased 163%. 

In Europe, during H1 of 2020, exports of cereals (particularly to the Middle East) and pharmaceutical products from the continent increased by 23% and 12%, respectively. 

For respondents in Africa, diversifying their supplier base was among the top two factors expected to determine international trade transactions up to 2025. 

African companies may find opportunities for supplier diversification within the region since the new trade agreement, the African Continental Free Trade Agreement (AfCFTA), came into force earlier this year. 

To optimise trade operations during the pandemic and beyond, African companies relied on a mix of advanced technologies: Internet of Things (IoT), accounting for 48% of respondents; cloud computing (26%); data analytics (20%). 

Furthermore, in the Middle East, 56% believe big data and analytics will have a significant positive impact on their ability to trade across borders in the next three to five years. An additional 43% believe IOT will have a similar impact and 32% report that both block-chain and cloud will have an impact.

One in six respondents, or 16%, in the global survey said enhancing their firm’s responsiveness to changes through real-time/predictive data analytics would be the most important factor determining how their company will be conducting international trade transactions in the future. 

For African companies, enhancing their firms’ responsiveness to changes through real-time/predictive data analysis was the top factor that will determine their approach to international trade transactions up to 2025. 

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