Towards an inflection point: The new drivers of growth for multinationals in Asia

Asia is the engine of global growth. In 2024, the region is on track to contribute around 60% of the world’s economic expansion.¹ At the same time, the region’s diversity, shifting geopolitical currents and rapid technological change can all make Asia a complex operating environment.

HSBC’s 10^th Asia Day forum, held on November 12 in Singapore, shed new light on how leading multinationals are capturing growth amid this complexity.

“While there are many risks which need to be managed, the forces propelling growth here in Asia remain strong,” said Christina Ma, Head of Global Banking, Asia Pacific, HSBC.

For global businesses, the ability to harness new technology and build more resilient supplier networks can be critical to success – now and in the years ahead.

Treasury managers have a central part to play in meeting both challenges. Artificial intelligence (AI) is already transforming their departments at every level, from streamlining processes to enhancing decision-making with new data insights.

Automation means that generating a counterparty report —a task that used to take days – can now be done in few seconds. According to speakers at HSBC’s Asia Day, financial technology companies are already developing AI agents that can match the expertise of a treasury analyst.

As well as increasing efficiency in treasury departments, AI is helping to redefine the role of chief financial officers.

With tools that can analyse and interpret vast amounts of operational data, CFOs are now better equipped to address complex business challenges and drive data-driven decisions across their organisations.

Risk management is a case in point. AI’s potential applications in this field include news scraping and predictive analytics. For example, AI tools can monitor news reports in multiple languages and generate real-time alerts of potential risks.²

This technology is also helping combat fraud. HSBC has partnered with Google to deploy AI models that reduced the number of false positives in financial crime detection by 60%.³

Still, AI adoption faces significant hurdles, attendees heard. Many companies are grappling with concerns around data security and data sovereignty. These include protecting proprietary information from exposure to unauthorised open-source AI tools and navigating national regulations on cross-border data transfers.

Building in-house models could mitigate those risks, but the cost of developing and maintaining proprietary systems that require large amounts of clean data can be a challenge.

Integrating AI into existing workflows also poses a human challenge, as roles may need to be reassigned.

Tancy Tan, COO of HSBC Singapore, said the bank is working closely with the Monetary Authority of Singapore on AI ethics to promote the "FEAT" principle: fairness, ethical accountability and transparency.

The challenge of technological change comes at a time of continued upheaval in global trade.

The Covid-19 pandemic shifted business priorities from optimising costs to ensuring the stability and diversification of supply chains. Inventory levels are increasingly part of the conversation around resilience against disruption.

Trade tariffs and geopolitical tensions have also made strategies like reshoring, near-shoring and friend-shoring more relevant. At the same time, meeting consumer expectations around ever-faster delivery times can require substantial investments in logistics networks.

“Resilience is more important than just cost,” said Rakesh Patwari, Regional Head of Solutions Structuring, South and South East Asia at HSBC.

A robust supply chain must also withstand rising levels of scrutiny on environmental, social and governance factors. While regulators are increasingly focused on decarbonisation, the biggest source of emissions for many businesses is also the hardest to tackle.

Scope 3 emissions—those generated upstream or downstream in a company’s value chain—can account for as much as 90% of a company’s carbon footprint.⁴ Measuring and reducing these indirect emissions could present a major challenge due to the lack of reliable data and the dependence on third-parties.

Access to finance is also an essential part of a resilient supply chain. In Asia, smaller businesses often struggle to access working capital as bank lending is constrained by the physical collateral a company can offer. This can be especially challenging in the growing services sector, which now accounts for a quarter of global trade.⁵

Here, too, digitalisation is providing new tools for businesses.

Large corporations and anchor buyers can play a crucial role in strengthening supply chains by leveraging their transaction data to help suppliers secure financing on better terms.

New financing solutions and partnerships with fintech or non-traditional players are also emerging. For example, vendors could improve the availability of credit by including embedded finance at the point of sale.

HSBC recently partnered with Tradeshift, a global trade network with a million users on its platform, to offer invoice financing to businesses across online marketplaces.⁶

“It’s not just transaction data in isolation, but data with trust, which is massively powerful and can drive credit and build resilience,” said Patwari.

The conversations at HSBC Asia Day 2024 made it clear that technology and resilience are top priorities for international businesses in Asia.

Clean, reliable data is key to meeting these challenges. Digital tools could offer more unprecedented visibility over liquidity, inventory and risks, allowing businesses to make better-informed decisions than ever before. At a time of economic and geopolitical uncertainty, being able to make those decisions with confidence is an invaluable asset to multinationals in the world’s fastest-growing regional economy.