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Bangladesh street scene

Bangladesh street scene

China remains a sourcing powerhouse for now, but an increasing number of buyers want to try out new suppliers in emerging regions such as Asia and Africa where wages are lower, according to the results of a recent survey conducted by a data company.

Global traders are looking forward to better trade and economic prospects in 2014, and they expect to spend more in the year ahead as they invest in growth, according to results of Panjiva’s study, “The State of Trade in 2014.”

And while China is still the preferred sourcing destination by nearly all the buyer-respondents, almost three quarters, or 74 percent, are actively looking for suppliers outside of the Chinese mainland.

Close to a quarter (22 percent) of buyers pointed to Vietnam as their next potential sourcing region, and 9 percent are looking to Africa, which was not identified as a destination in the inaugural report of Panjiva released in 2012.

Bangladesh also remains an attractive sourcing market, despite reports of poor factory conditions as highlighted by a factory’s collapse and several other significant incidents that have made global news.

Suppliers, meanwhile, remain interested in the U.S. market. “While suppliers are challenged by price pressure from competitors and around 70 percent cite matching prices as a key hurdle, they still hope to engage with the U.S.,” said the report.

The respondents’ optimism, however, is held in check by concerns about rising wages in manufacturing sites and the lingering possibility of a slump in global demand.

More than a quarter of respondents are worried about rising wages in China, where salaries are said to be rising steadily.

Further, a possible hiccup in the gradual recovery of global demand continues to cause unease for more than 20 percent of buyers and suppliers.

“While people have been talking about it for years, it’s clear that we are finally on the path to economic recovery, yet those involved in global trade still have some warranted concerns,” noted Josh Green, CEO of Panjiva. “The rising costs of manufacturing will create inflationary pressure and lead sourcing executives to seek out new regions where they can find lower costs.”

The latest report is based on a survey of 100 trade professionals conducted in December 2013. The respondents represent global buyers, suppliers, and other traders from companies of all sizes from all over the world.


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