As the pitfalls of over-reliance on Chinese manufacturing capabilities were unveiled by COVID-19, pre-existing manufacturing relocation trends have accelerated, and many companies are forced to re-think their approach to supply chains. Years of rising manufacturing costs in China has seen a gradual migration of manufacturing and sourcing capacities into neighboring low-wage Asian countries. With the onset of COVID-19, the adoption of "China Plus One" strategies have intensified, with companies seeking to diversify concentration risk to minimize disruption to their businesses. The beneficiaries of this diversification trend have been well documented, with the "Mighty Five", namely Malaysia, India, Thailand, Indonesia and Vietnam expected to inherit China's crown for lost-cost manufacturing products.
Despite the Trump Administration's stated policy goal of bringing manufacturing jobs back to the US, a recent survey by AMCHAM revealed that 59% of US firms leaving China are going to developing countries in Asia. Similarly, a JETRO survey showed concurring relocation trends amongst Japanese companies, with 90% of them going to ASEAN countries and India. Two key beneficiaries of this diversification trend are Vietnam and India. Between 2018 and 2019, a large fraction of the $19.6bn decline in US imports from China has translated into gains for Vietnam and India, whose exports to the US surged 38.4% and 12.4% respectively. With Vietnam's location in the ASEAN region potentially offering access to the $2.2 trillion dollar valued intra-ASEAN trade, and India's recent land offering incentivizing the relocation of US MNCs, Vietnam and India have emerged as prime alternative locations for manufacturing and sourcing outside of China.
In this second event within the AmCham Hong Kong's Future of Supply Chain Series, we explore the ongoing process of supply chain diversification in Asia, with a special focus on Vietnam and India. With considerations spanning from low costs to domestic regulations, what are the potential opportunities and hurdles in the adoption of China Plus One strategy? Are China's southern neighbors capable of replacing them as the world's manufacturing hub in the long run? What are the potential disparities in relocation trends amongst various industries?
Please join this webinar by a panel of distinguished speakers as they decipher the impact of the global supply chain reconfiguration and share their outlook on the future of supply chain from an Asia Pacific perspective.
Please join us for a Zoom meeting with the following details:
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