Businesses predict double-digit growth as promise of new markets trumps supply chain fears, says HSBC


Business leaders are expecting double-digit revenue growth next year, offsetting damage from short-term supply chain disruption by pushing into new markets to reach more customers, according to new research from HSBC.

HSBC’s Navigator: Voice of Business report, which polled over 7,350 business decision-makers from 14 global markets, found that businesses expect to boost sales by an average of 19% in the next 12 months, even though 70% expect that supply chain disruption will reduce their income by an average of 22%. The vast majority (87%) view expanding into new markets as a growth driver for 2022, while nearly half (46%) believe it will have a ‘strong impact’ on growth.

Barry O’Byrne Chief Executive Officer, Global Commercial Banking at HSBC, said: “Companies are firmly back in growth mode. Leaders are optimistic about the prospects of 2022, with the majority targeting sales that surpass pre-pandemic levels. International expansion is at the heart of this growth. Business leaders have astutely resisted the temptation to scale back through recent pandemic-fuelled turbulence and are increasingly recognising that a global multi-market strategy can push their business to new levels.

“To achieve these ambitions, businesses will have to tackle shorter-term challenges. Our findings reveal supply chain disruption will place increased pressure on costs and the flow of goods, with the threat of further Covid-19 outbreaks and higher inflation also top of mind. In addition to confidence and resilience, it’s crucial that business leaders continue to innovate, disrupt and invest in the right areas like improving sustainability, supporting and growing the workforce, and embracing technology to drive greater efficiencies”, continued O’Byrne.

High growth expectations globally

Ambitions of expanding into new markets are fuelling high growth expectations for businesses over the coming year, with businesses optimistic about revenue growth. HSBC’s report found:

– Sales outlook: Two thirds (66%) of businesses globally are optimistic about future growth over the next 12 months, while the majority (90%) expect overall sales to grow over the next year. Only 8% of businesses said they are more pessimistic about their future growth prospects than they were 12 months ago.

– High revenue growth expectations: Over half (56%) of businesses expect revenue growth of over 10%, while on average business leaders predict revenue growth of an impressive 19% over the next 12 months alone.

– International growth key for leading businesses: Those expecting revenue growth of 30% of more in the next 12 months (31% of businesses) list ‘expanding into new markets’ as the top priority to power this growth.

Supply chain issues pose short term challenges, but businesses remain resilient

Despite a more positive outlook, supply chain disruption this year has created challenges that businesses need to overcome to achieve their global ambitions.

However, supply chain disruption remains of relatively low concern across the majority of global businesses, with only a quarter (23%) seeing it as a serious threat to business growth over the next 12 months. This compares to the resurgence of Covid-19, identified as a bigger threat to business growth plans (40% respondents), and rising inflation (34%).

Meanwhile, over half (56%) of businesses are planning to increase the number of suppliers they are working with in a further move to greater diversification. This follows a similar pattern to business behaviour over the past 24 months, with over a third (36%) having increased the number of suppliers they are working with internationally in the past two years, compared to just 15% of businesses who have decreased.

Sustainability fuels growth

Sustainability is high on the agenda for future-focused businesses looking to improve revenue longer term. While two in five (39%) businesses have already set net zero targets in their own operations and across supply chains, a further 45% plan to within the next 12 months. As well as improving sustainable credentials, leaders also recognise a positive financial impact and are prepared to invest meaningful capital:

– On average businesses are planning to invest over 7% of their operating profits into increasing the sustainability of their operations in the next 12 months

– Businesses are seeing the financial case too – with over two in five (43%) expecting increased interest in sustainability to have an impact on business growth

– The majority (81%) predict an increase in revenue as a result of enhanced investment in their sustainability, with an expected average revenue increase of 11%

– A third (32%) are making their business more sustainability-driven or setting sustainability targets to protect their business against future challenges and shocks.

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