US high-tech companies ramping up exports

GROWING MARKET: An Apple employee counts money as a customer purchases an iPad. US high-tech companies expect to export more cellphones, tablets and other electronics over the next two years to growing middle-class populations in developing nations. - Reuters

NEW YORK: Most US high-tech companies expect to export more cellphones, tablets and other electronics over the next two years to growing middle-class populations in developing nations, citing free trade pacts and rising labour costs abroad, a survey found.

About 85% of US high-tech executives polled said the Obama administration was somewhat or very likely to meet its goal of doubling exports by 2015. Just 40% of executives were as optimistic two years ago after the export target was set.

The third annual survey was conducted by IDC Manufacturing Insights for United Parcel Service (UPS), the world’s largest package delivery company.

“It’s really being driven by this emerging middle class that have more disposable income and a heavy appetite for technology products like cell phones, tablets and laptops,” Ken Rankin, high-tech marketing director at UPS in Atlanta, said in an interview with Reuters.

Scott Davis, UPS chief executive officer, is on the President’s Export Council and has touted free trade agreements as critical for boosting US exports and the economy.

A free trade agreement between the United States and Panama will soon go into effect, US Trade Representative Ron Kirk said on Friday. The US-Colombian agreement went into force in July, after the US-South Korea pact in March.

Only 23% of the companies said they had export growth over the past two years, but 74% now expect to export more over the next two years, Rankin said.

“Despite all of the short-term talk of economic weakness and the dreaded fiscal cliff, the high-tech executives that we talked to really had a bullish outlook in the next two to five years when it comes to export growth for their products,” he added.

The fiscal cliff refers to the year-end deadline for about US$500bil (RM1.5 trillion) in expiring US tax cuts and automatic spending cuts set for next year unless Congress can compromise over lowering the budget deficit.

The survey of 125 high-tech manufacturers included senior supply chain and logistics executives in consumer electronics, semiconductor, communications equipment and electronic component/accessories industries.

High-tech product sales and shipments are expected to grow the most, by 22%, in India, the Middle East and Africa, over the next three to five years, the survey said.

Increases are expected to range from 18% in Brazil and 19% in the rest of South America to 15% in Eastern Europe, 13% in South Korea and 8% in China and in other Asian nations.

Lingering barriers to boosting exports include the difficulty of managing spread-out global inventory, unstable global suppliers and security concerns, the survey found.

“Additional progress in free trade agreements would be a big winner, not only for the high-tech space but for all US industry,” Rankin said.

The high-tech companies that were surveyed sell and ship 97% of their products in North America. Within three to five years, that percentage will decline to 90% as demand mounts in emerging markets for their products.

“Winners will be those companies that successfully leverage the emerging market growth with strong products and executive import/export excellence,” said Rankin.

Also, companies such as Federal Express and UPS have already seen a shift in demand for shipping products more cheaply, such as by sea, rather than premium-priced express air services, because of the weakening global economy. — Reuters

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