Global Trade & Supply Chain & Cosmetics Market 2022 Analysis Report

1, Global Trade Growth 3.0% Inflation and Supply Chain Pressure Increase in 2022

On the 12th, the World Trade Organization (WTO) released the latest trade data forecast, saying that due to the situation in Ukraine, the global economic outlook is bleak, and the global commodity trade volume is expected to grow by 3.0% in 2022, lower than the previous forecast of 4.7%.
The WTO also said that global trade volume will increase by 3.4% in 2023, but due to the uncertainty of the current situation, these estimates will be more uncertain than usual.

growth-trend

The WTO said the most immediate economic impact of the crisis was the sharp rise in commodity prices. Despite their small share of world trade and output, Russia and Ukraine are significant suppliers of essential commodities, including food, energy, and fertilizer, whose supply is now under threat. Grain shipments through Black Sea ports have been halted, with potentially dire consequences for food security in developing countries.
At the same time, the situation in Ukraine is not the only factor affecting world trade at present. The WTO has suggested that seaborne marketing is now also facing disruptions, leading to another shortage and rising inflation in the manufacturing sector.

WTO Director-General Ngozi Okoncho-Iweira said that governments and multilateral organizations must work together to promote trade when essential supply is facing enormous inflationary pressures and supply chain pressures are increasing.

The WTO explained that because there are few exact data on the economic impact of the Russian-Ukrainian conflict, WTO economists have to rely on simulated data to make reasonable assumptions about GDP growth in 2022 and 2023.

Under these assumptions, global gross domestic product (GDP) is expected to grow by 2.8% percent in 2022, down 1.3 percentage points from the 4.1% previously forecast. In 2023, global GDP growth should pick up to 3.2%, close to the average growth rate of 3.0% from 2010 to 2019.
What needs to be explained is that in the 20 years before the global financial crisis, the growth rate of international commodity trade was about twice the growth rate of global GDP. Still, the ratio of trade growth to GDP growth after the crisis dropped to about 1:1 on average.
If the current forecast is realized, the ratio is 2022, and 2023 will be 1.1:1, which indicates that the relationship between trade and production will not change fundamentally.

The WTO says the predicted risks are mixed and complex to assess objectively. Suppose the current situation ends earlier than expected. In that case, there is some upside potential for global trade, but if the situation in Ukraine continues for a long time or escalates, there may be significant downside risks.
In addition, WTO data show that the rise in global fuel prices predates the conflict between Russia and Ukraine in terms of commodities. The cost of benchmark Brent crude oil in March was the US $118 per barrel, up 38% from the level in January and up 81% year on year (it is worth noting that the daily price of benchmark Brent crude oil has fallen somewhat recently, from a peak of US $128 per barrel on March 8 to the US $104 per barrel on April 1).

Unlike oil prices, gas prices tend to vary widely across regions. Natural gas prices in Europe rose 45% percent between January and March to $41.0 per million British thermal units, while prices in the United States remained relatively low at about $4.9 per million British thermal units.
Higher oil prices could reduce global real income and import demand, while higher gas prices could significantly impact Europe, the WTO said.

2. Global trade prices will fluctuate significantly in 2021.

Due to the volatility of prices, the nominal growth data of merchandise trade in 2021 is very different from the natural growth adjusted for inflation.
WTO statistics show that in 2021, world merchandise trade, measured by the average of exports and imports, increased by 26%, which means that the average export and import prices jumped by 15% this year. The dollar value of the fuel and mineral trade rose 59% percent, agricultural products added 19%, and manufactured goods rose 21% percent.
Data show that the year-on-year growth of some products (steel, chemicals, integrated circuits) is stable, while the development of other products (clothing, machinery) is weak. The value of trade in pharmaceuticals, computers, and integrated circuits was higher than pre-epidemic levels in 2021. This may be due to the high demand for the new crown vaccine and the increased penetration of remote work. In contrast, trade-in automotive products grew 14% YoY in 2021 but still contracted by 4% compared to 2019.
World trade in commercial services grew 15% in 2021, driven by the high demand for transport services. Tourism exports have continued to grow but remain weak, as global travel restrictions have only eased in some areas. Other service categories, including financial and commercial services, increased by 12% compared with the previous year.
The WTO says Western sanctions against Russia could substantially impact trade in commercial services. Russia is a net service importer, with US $74 billion in imports and total exports of US $55 billion in 2021. Russia ranks 24th among service exporters, with a 0.9% share in world trade. Russia ranks 19th among the importing countries (11th excluding intra-EU business) and accounts for a 1.4% share of world trade.
In 2019, the EU accounted for more than 42% of Russia’s service imports and 31.1% of its service exports. In the same year, Russia also purchased services from Turkey (7.7%), Britain (5.1%), the United States (4.0%), and other countries.
Before the epidemic, travel/tourism and air transport services were Russia’s most significant trade service categories, accounting for 46% of its exports and 36% of its imports. The epidemic hit these service categories and may now be severely affected by economic sanctions. Risks threaten Ireland due to its essential position in aircraft operating leasing.
Overall, Russia paid $3.9 billion for aircraft, ships, and other operating leases from the EU in 2019, of which $2.6 billion came from Ireland. In 2020, Russian imports of operating leases fell by 44% due to epidemic-related travel restrictions.
At the same time, intellectual property services are the third largest service category imported from Russia. The European Union, Switzerland, the United States, the United Kingdom, South Korea, and Japan provided a total of Russian 96% imports in 2019, worth the US $6.6 billion. This includes royalties, R & D output, industrial processes/designs, concessions, trademarks, etc.

3. Global Cosmetics Market Scale

As people’s pursuit of “beauty” continues to increase, the market size of the cosmetics industry continues to expand, and the market size increased from 162 billion euros in 2010 to 239 billion euros in 2019; affected by the epidemic, the global cosmetics market size declined in 2020, the market size of 200 billion euros, a decrease of 39 billion euros compared to 2019. The China Business Industry Research Institute expects the global cosmetics market to reach 222.2 billion euros in 2022.

Global cosmetics industry profit analysis.

Generally speaking, the profit level of the cosmetics industry is affected by brand awareness, technical level, sales model, and other factors. Companies with high brand awareness, leading product technology level, and direct sales model can usually obtain a higher profit level.

Changes in the profit level of the cosmetics industry are affected by many factors: on the one hand, the industry competition is intensifying, the industry competitors continue to increase, and the market maturity level continues to grow, which will lead to a decline in the overall profit level of the industry; on the other hand, the continuous update of product technology, The emergence of new products has promoted the rise of the overall profit level of the industry. Cosmetics directly act on sensitive parts such as consumers’ eyes and facial skin, and product safety and effectiveness are essential to consumers. The product’s production process and technical level determine the product quality and product effect experience. The improvement of the technology level of the industry can bring a better product experience to customers. It will drive up the profit level of the industry. At the same time, cosmetics, especially make-up products, usually contain vital fashion elements. Industry manufacturers will regularly or irregularly launch new products with different concepts and styles, which can inject fresh vitality into business operations and promote the overall profit level of the industry. Rise.

L’Oreal, Procter & Gamble, Unilever, Estee Lauder, and Shiseido account for about 52.4% of the global market share.

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