Global markets are evolving rapidly and that represents a world of great business opportunity that Scottish Enterprise can help you with.
It’s highly likely that many components in your smartphone originated from China. Your clothes may have been imported from Indonesia or Vietnam, and the coffee you’re drinking perhaps came from Kenya or Costa Rica. You may even be planning a business trip to Hamburg, Houston or Hanoi.
As we turn our minds to new trade agreements with the European Union and other major markets, it’s worth considering the explosion in global trade in recent decades. In less than thirty years, China has become the world’s second-largest economy and emerging economies now account for over half of world gross domestic product (GDP) and almost 80% of global economic growth.
As marketplaces around the world continue to evolve with pace, Scottish Enterprise – in partnership with Invest Northern Ireland, Highlands & Islands Enterprise and VisitScotland – has taken a forward-facing look at how world trade could look in 2025 to help businesses anticipate future trends and opportunities for growth. The GlobalScots network has contributed their experiences too, to help businesses understand the huge scale of opportunities presented by trading overseas in the next decade.
“We want to ensure that Scotland’s approach to trade will remain effective in the longer term, understanding how trade might evolve and at the pace and nature of some of that change,” said Ewan Mearns, strategy partner at Scottish Enterprise, who oversaw this project.
“We’ve tried to look from the outside in; understand the demands from overseas, and what’s really driving growth.”
What will global trade look like?
Global trade agreements are likely to become regionalised and more fragmented as developing nations seek to compete on their own terms, creating a wealth of opportunities for small and medium-sized enterprises (SMEs) as they take a lead role in driving trade, with digital disruption levelling the competitive playing field between them and larger firms.
Value chains will become more international in nature. From the sourcing of raw materials to production, sales, and services, increasingly businesses will look globally for the best comparative cost and quality of skills and materials.
Factors driving those decisions will be dominated by innovation, talent and skills, and data and technologies, including the growing applications of robotics, AI and online digital platforms.
How do those things affect the capabilities that companies need, to capitalise on these opportunities?
Primarily, in three distinct ways, Mearns says. “First is innovation; understanding how to innovate, including product, process and service model innovation.
“Second is being able to operate digitally; blending physical and digital trade seamlessly, and thinking about how to evolve a business model.
“The third part is adopting a global mindset from the outset; the strategic agility to switch between markets, forge new partnerships overseas and respond to market needs and global shocks.”
Where will we see changes in demand?
There will be an extra 800 million people on the planet in 2025 and an extra billion aspirational consumers. The ability to solve problems like access to water in developing nations will represent a significant business opportunity, whilst “young”, tech-savvy and entrepreneurial populations in Asia and Africa will drive the development of scores of new business ideas.
“When you stand back and think about what’s changing in the world,” Mearns says, “population growth is driving a lot of that change. Increasingly affluent consumers have bigger demands, in terms of products, infrastructure and services, which will grow in importance.
“88% of the new middle classes will be in Asia by 2025, so Asia will really fuel that growth.
“There are huge opportunities, and we have a number of firms specialising in areas like clean water technologies, where they could rapidly scale to meet these emerging demands.
“Businesses can access Scottish Enterprise’s free research service to get more detailed insight on these trends and market specific information.”
How will we trade in the future?
Markets in India, China, Southeast Asia, and Africa are expected to grow fastest of all, and digital platforms like Amazon, Flipkart and Alibaba will become increasingly important trading channels worldwide.
“We want to make sure that Scottish companies are using these platforms as a springboard to success both at home and overseas,” syas Mearns.
An example of recent success is textiles specialist Johnstons of Elgin. Scottish Enterprise put it in touch with experts who understood the importance of social media and its influence in China, and helped it to build a social media presence in that market on WeChat.
“Digital trade, using online platforms and social media channels is quite a new aspect of trade for many companies, and raises questions about company capabilities and understanding. What we want to do is develop successful market entry models, like Johnstons of Elgin, to make it easier for other Scottish businesses to then trade in those markets.
“But for the next decade, digital technology is an interesting one. In places like Africa, they don’t have the legacy of fixed technology infrastructure; they’re going straight to mobile, which represents a brand new opportunity.
“Internationalisation will always be a powerful driver of business growth. And with global markets changing so fast the opportunities are huge.
“Jump in, take the right advice, and learn from that,” Mearns concludes.
If you have a question about international trade you can get in touch with one of Scottish Enterprise’s export advisers at