The evolution in how corporates are managing and financing supply chains creates three key opportunities:
- A bigger role for platforms, paving the way for embedded financing
- The integration of sustainability within processes and outcomes
- New opportunities from stronger and closer intra-regional trade ties
Firstly, as corporates buy and sell more using different platforms, banks are well-placed to support given their payments infrastructure and financing expertise. “This will unleash a wave of data-driven lending, embedded on platforms in real-time, and earlier in the cycle,” said Gahlaut.
Secondly, environmental, social and governance (ESG) considerations are becoming integrated more deeply in supply chains as sustainability continues to rise up the corporate agenda. There are also financing incentives as businesses receive more attractive terms as part of sustainable supply chain financing programmes. HSBC is working with leading global firms such as Walmart, Puma and PVH, among others, to embed sustainability objectives in their respective supply chains.
Thirdly, trade offers significant growth potential. A case in point is the Regional Comprehensive Economic Partnership (RCEP), which has brought together 15 economies in Asia Pacific. “Companies have started to realign their supply chains to capitalise on the advantages offered by RCEP, which harmonises the rules of origin across much of the region, lowering the cost of inputs for manufacturers and making their goods more price-competitive,” added Gahlaut. “It also provides greater access to larger markets for exporters, spurring investment within the RCEP and from beyond.”
More recently, in early 2023, the UK joined the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). This allows businesses in Southeast Asia to gain greater access to – and preferential treatment in – a market of nearly 70 million people.
“Continued progress on the execution of free trade agreements will allow for a more transparent and predictive trading and investment environment which will lead to economic growth,” said Gahlaut.