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October 03, 2012

U.S. Tech Companies See a Positive Outlook in the Global Market for the Next Five Years

By Frank Griffin, TMCnet Contributing Writer

The economy in the U.S. is still in recovery mode but there is a consensus amongst executives that the global outlook for the next five years is positive for high-tech firms. As a whole the global economy is shrinking but different regions and industries are doing well and thriving. The annual Change in the (Supply) Chain survey from UPS, conducted by IDC (News - Alert) Manufacturing Insights, highlights the sentiment of senior-level supply chain decision makers in the U.S. in the high-tech and electronics sector.

The executives questioned for the survey took into consideration the increase of wages abroad, legislations in the U.S. affecting exports laws and trends affecting supply chains in the high-tech and electronics industry. The survey was conducted by focusing on exports to determine if the goals of the National Export Initiative put in place by the Obama administration can be achieved by 2014. Regarding the initiative, 85 percent of the executives said it is very likely or somewhat likely it will be achieved. The same executives were somewhat pessimistic when the same question was asked two years ago with only 40 percent giving the same answer to the question.

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The primary reason for this optimism for one third of the respondents was the increase of disposable income in emerging markets, while another third said it was the rising wages in traditionally low-wage manufacturing jobs. Legislation also played a big roll with one in five citing changing laws in free trade agreement in Asia. The changes in these laws will benefit companies in the U.S. and 81 percent said it will affect the import and export to and from the region positively.

The biggest growth will be in Africa and the Middle East, with a 22 percent increase followed by South America except Brazil by 19 percent, Brazil by 18 percent, Eastern Europe by 15 percent and Korea 13 percent. As of right now North America is still the largest high-tech consumer market for the next three to five years with a decrease in demand of seven percent after that period while other regions will experience the aforementioned growth.

"The anticipated shift in consumer market demand for high-tech goods brings opportunities and challenges for high-tech companies. Global demand will continue to grow in new and existing markets, causing supply chain executives to shift not only their fulfillment operations but also their sourcing strategies to serve those markets. We have already begun to see such a shift as companies look to India and Brazil as key markets not only for fulfillment but for production as well," said Ken Rankin, high-tech marketing director at UPS. 

Overall, companies see many opportunities to grow in the export market considering the stiff completion coming from Asia and other developing countries. Issues with supply chain costs, lead times, responsiveness, unstable suppliers and intellectual properties are some of the pain points that need to be improved according to the survey.

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Edited by Brooke Neuman
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