The United States’ protectionist measures and a looming trade war are triggering fears among Asia-Pacific exporters that turnovers will decline, according to a report by trade credit insurer Atradius.
The Atradius Payment Practices Barometer for Asia-Pacific revealed that 45% of exporters expect their turnover to decrease between 10% and 20% due to uncertainty over, and changes in, trade agreements.
In China, a slim majority (52%) of suppliers have expressed pessimism about their turnovers due to the introduction of trade barriers such as tariffs and targeted restrictions. Several other markets that have close trading relationships with China, such as Indonesia (65%), Taiwan (48%) and Hong Kong (47%), have echoed the sentiment.
As the protectionist trends impact trade with the US, many Asia-Pacific countries are turning to Australia and forging deeper trade and economic ties. According to Atradius, this could be one of the reasons why 54% of Australian suppliers surveyed did not expect a negative impact on their business. Japanese suppliers (51%) were also optimistic about the situation.
“Many Asian companies are now benefitting from further liberalisation of international trade as new trade agreements are agreed, or existing ones enhanced,” said Eric den Boogert, managing director of Atradius Asia. “With the growing opportunities, providing our customers with the confidence they need to expand with the right business partners is a priority for us.”
The report also revealed that average payment periods have increased slightly, from 55 days in 2017 to 57 days in 2018. Except for China and Singapore, all Asia-Pacific markets have experienced an increase in payment duration over the past year.
In spite of minor changes in the average proportion of uncollectable business-to-business receivables, the customer going out of business or declaring bankruptcy remained the most common reason for writing off these receivables.
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