HSBC CEO Noel Quinn said that there is currently a trend of increasing diversification outside of China, noting that this process does not only concern foreign companies.

The corresponding statement was made by the head of one of the largest financial institutions in the world on Wednesday, November 8, at the Bloomberg New Economy forum in Singapore. Noel Quinn reported that the head of one of the units of this bank told about a 70% increase in the intensity of activity associated with providing Chinese clients with assistance in diversifying their business strategies outside the territory of this Asian country. The head of the financial institution described the current trend as a very interesting shift.

Noel Quinn, who was appointed CEO of HSBC in 2020, said that currently, the level of activity of Chinese clients leaving this country is higher than the same indicator within the state. He said this in response to a question about what measures companies are taking to minimize the risks associated with the world’s second economy, which is at the moment trying to overcome many problems and is also in a state of confrontation with Washington in the technology industry, which has already caused restrictions on local firms’ access to advanced chips.

HSBC is the world’s largest trade finance bank, which is focused on Asia. This lender orientation means that the organization helps importers and exporters to carry out transactions.

Noel Quinn stated that Chinese suppliers are currently expanding their chains of interaction with foreign markets in other parts of Asia and other parts of the world. In his opinion, this strategy of activity is justified. He explained his position on the assessment of the actions of Chinese suppliers by the fact that Beijing is gradually abandoning the role of a global factory.

For several decades, China has demonstrated rapid economic growth. This dynamic was due to the country’s confirmed in the material plane status as a world center of trade and production. Over the past few years, China has been trying to shift the focus towards a more active development of the manufacturing sector, which is determined by consumption and services.

Noel Quinn said that Beijing is currently changing its strategy for the upgrowth of the economic system. According to him, these actions by the Chinese authorities mean that the country’s supply chains and supplies around the world will undergo a fundamental transformation over the next 10-15 years.

Experts say the trend of diversification outside of China has been observed for many years. Currently, many companies based in this Asian state are investing in the development of production activities in other countries. This strategy of commercial behavior is conditioned to reduce the costs associated with the risks of the world’s second-largest economy. The relevant information is contained in the report of the research company Rhodium Group, which was published in July.

At the same time, the experts of the mentioned company note that the diversification of production, in which making performance is activated in India or Vietnam as in alternative manufacturing centers, does not mean a loss to China. In their opinion, Beijing will not suffer a total defeat because new plants in specified and some other countries are likely to need the use of consumables from China. Researchers say that replacing the manufacturing center as a geographical area will take several years and possibly decades.

Also, the Rhodium Group report indicates that there is no single set of data that would effectively reflect the decisions of companies to intentionally reduce the level of real economic impact on China. In this case, we mean the term de-risking, which has been actively used in recent years, which means reducing the scale of activities in a certain region without completely severing ties.

Officials and top managers in the West have repeatedly stated the need for a negative scenarios possibility reduction strategy as a way to overcome risks and their potential consequences associated with geopolitical uncertainty in China.

Noel Quinn says that the market of the mentioned country remains attractive for many international companies. According to him, this is due to the growth of the consumer class in China and the increase in internal urbanization. The head of the bank noted that from the point of view of economic expediency, suppliers of products will be interested in this region. At the same time, he said that the mentioned arguments do not take into account the political factor.

As we have reported earlier, China’s Factory Activity Declines.