3 benefits of leveraging opportunities of intra-Asian trade blocs

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Asia has undergone a major transformation from being solely the world’s production hub to becoming an important centre for consumer demand. And with remarkable and constantly evolving networks in trade, investment, and innovation, Asia has progressively positioned itself at the centre of the global economy

Moreover, its inherent diversity and complementary characteristics, coupled with powerful networks developing within the region, make it easier for businesses to navigate through highs and lows. As such, Asia's close-knit economy has matured to focus sharply on international business opportunities that unlock new business growth on a global scale.

In this blog, we will explore the numerous opportunities available to Pakistani businesses and highlight why they should tap into the intra-Asia trade market.

What is the meaning of intra-regional trade?

Intra-regional trade refers to the exchange of goods and services among countries within a specific geographic region. This type of trade can promote economic integration and development within the region, as well as increase trade flows and reduce dependence on external markets. 

Examples of regional trade agreements include the European Union (EU) and the Asia-Pacific Economic Cooperation (APEC). On the other hand, intra-Asia trade, as its name suggests, means the trading of commodities and services between countries within the Asian region. This trade is mainly facilitated by the geographic proximity of these countries. The rich tapestry of established trade blocs and agreements, such as The Regional Comprehensive Economic Partnership (RCEP) agreement, further promote regional economic integration. These agreements have also facilitated the growth of intra-Asia trade, allowing businesses in the region to trade with ease and minimal trade barriers.

The significance of intra-Asia trade

The interconnectivity of the global economy has given rise to a new era of international trade and mass production. Governments worldwide are forging economic and trade agreements to enhance economic activities and facilitate greater trade. This has enabled countries to tap into new markets, forge strategic partnerships, and increase their competitive advantage in the global marketplace. 

The result is a complex web of economic and trade relations that is constantly evolving and creating new opportunities for businesses to thrive, even in Asia. This strengthening trade and value chain linkages among economies in the region have also led to Asia becoming one of the most significant players in the global economy. In fact, according to the Asian Development Bank, intra-regional trade accounts for close to 60% of Asia's total trade and global trade growth has constantly been rising annually. 

The current landscape of intra-Asia trade

The landscape of intra-Asia trade is diverse and complex, with a vast range of industries involved. Therefore, it is unsurprising that the region's economies are at different stages of development. In general, the major trade routes in the Asian region include the China-Japan-South Korea triangle, the Southeast Asia trade bloc, and the South Asian trade bloc

And according to the Brookings Institution, intra-Asian trade within these regions has surpassed trade with the EU and US markets, indicating the strength and resilience of intra-Asian trade despite economic uncertainty and market turbulence. 

Opportunities for Pakistani businesses

Sitting at a critical geostrategic position in South Asia, Pakistan can connect South Asian countries with landlocked Central Asian countries. With a population of two billion, South Asia is becoming an economic powerhouse, and the formation of regional economic blocs has become a crucial route for economic growth. Moreover, Pakistan’s participation in massive bilateral projects like the China Pakistan Economic Corridor (CPEC) further enhances its position as a key trade hub in the region.

However, Pakistan's export share in other South Asian countries is minimal, except for Afghanistan, Bangladesh, India, and Sri Lanka, hitting close to 32% in total exports, according to the Asia Pacific Management Review. This means that Pakistan has a minimal share of its exports to other South Asian countries like Nepal, Maldives, and Bhutan. And with the CPEC supposedly being a catalyst for the development of extensive transportation and infrastructure networks, creating new avenues for trade and investment, one would assume that this would no longer be the case. However, import and export patterns demonstrate otherwise. For example, according to the Pakistan Bureau of Statistics, some of Pakistan’s main commodities of export in 2022 were knitwear, towels, and other cloth articles and house linens. And in February 2023, the top imports of the United States from Pakistan were millions dollars worth of the aforementioned. However, exports to Nepal fell only within the thousands.

Therefore, when it comes to other Asian countries, there is significant potential to boost trade creation and enhance economic growth. So, what will be the benefit of tapping intra-Asia trade?

1. Increased market access

One of the primary benefits of intra-Asia trade for Pakistani businesses is the opportunity to tap into the vast Asian market, which includes a large number of emerging markets for international business. With the Asian economy growing rapidly, it has emerged as a desirable market for businesses seeking to broaden their consumer reach and enhance their profits, especially if they have localised their business for these overseas markets. 

For example, suppose a Pakistani business is looking to export its products to other countries. In that case, intra-Asia trade can help them to establish new markets in Asian countries like China and Japan. 

2. Diversified supply chains

Diversifying their supply chains is another significant advantage to gain from intra-Asia trade. The region has a wealth of raw materials and low-cost manufacturing hubs, providing Pakistani businesses with more options for sourcing their products. This can lead to cost savings and increase their competitiveness in the global market.

For example, raw materials can be sourced from countries like Indonesia, Malaysia, and Thailand, where these materials are readily available at a lower cost. These raw materials can then be leveraged to manufacture products in low-cost manufacturing hubs like China for further cost savings. In addition, Pakistani businesses can leverage their expertise in textiles and garments to export to countries like China, which has a high demand for these products. By understanding the specific demands and preferences of different Asian markets, Pakistani businesses can tailor their products and services to meet the needs of these diverse consumer bases.

3. Expanded customer bases

Another advantage of intra-Asia trade is the ability for businesses to expand their customer base. The region has a growing middle class, which is driving demand for quality products and services. Pakistani businesses can tap into this demand by offering high-quality goods and services tailored to the needs of the Asian market. This will allow organisations to gain a competitive advantage over their counterparts and establish themselves as leaders in their respective industries.

Support your intra-Asia trade goals with DHL Express

Intra-Asia trade presents a vast array of opportunities for Pakistani businesses looking to expand their operations. By leveraging these opportunities, companies can reap many benefits. And since expanding into new markets requires reliable cross-border delivery solutions to overcome logistical challenges and ensure timely delivery of your products, partner with DHL Express, a global logistics leader. With an extensive global network and priority shipping services, we can help you confidently conquer new frontiers and unlock exciting opportunities in emerging markets. 

To learn more about how DHL Express can support your business's intra-Asia trade goals, open a DHL Express business account today.