**Global**: A new report reveals how businesses in the Asia Pacific are pivoting towards ‘China Plus One’ supply chain strategies to navigate geopolitical challenges, with key trends highlighting diversification, government interventions, and technological investments aimed at operational resilience.
A recent report from Global Trailer Magazine highlights the complex challenges faced by businesses in maintaining their supply chains amidst escalating geopolitical tensions, particularly between China and the United States. This comes against a backdrop of various disruptors such as tariffs, sanctions, and climate change that significantly impact economic stability.
In response to these challenges, nearly 33 per cent of businesses in the Asia Pacific region are reportedly implementing “China Plus One” strategies. This involves creating parallel supply chains to mitigate potential disruptions linked to geopolitical risks, with an additional 29 per cent establishing dual supply chains tailored to cater to both Chinese and US markets. This strategic shift is critical as firms face an increasingly fragmented trade environment, with an emphasis on resilience and adaptability, as evidenced by the findings presented at the World Economic Forum.
The fifth annual Trade in Transition study conducted by Economist Impact, which surveyed over 3,500 supply chain executives globally, identifies three main trends within Asia Pacific trade:
-
Strategic Diversification: Businesses are accelerating alternative production hubs across other Asian countries like Thailand and Vietnam. This reduced reliance on any single market is designed to manage risks linked to geopolitical dynamics and improve operational oversight.
-
Government Intervention: The establishment of regional preferential trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), supports cost management and regional integration. Businesses benefiting from these agreements report significant cost savings and enhanced sourcing capabilities within the region.
-
Technological Adoption: Companies are increasingly investing in emerging technologies, including automation and artificial intelligence, to address workforce shortages and improve productivity. According to the report, 36 per cent of business leaders in APAC have reported significant reductions in operation costs thanks to such technological interventions.
In commentary on these changes, Glen Hilton, CEO and Managing Director of DP World in the Asia Pacific, remarked that “the Asia Pacific region is in an era of significant transformation.”
Hilton, who oversees operations in several key markets such as Australia, China, and the Philippines, emphasised the importance of balancing ambition with caution amidst these changes, and expressed DP World’s commitment to helping businesses design agile supply chains that leverage the region’s growth potential.
John Ferguson, Global Lead at Economist Impact, noted that global trade is expected to be shaped by broader forces, namely geopolitics, climate change, and advances in AI and automation, reiterating that firms that remain agile will be best positioned for success.
The report underlines the importance of dual supply chains as a risk management strategy, enabling companies to navigate the complex regulatory requirements of both the Chinese and US markets. This approach, while essential, comprises one part of a broader set of supply chain strategies that includes diversification and regionalisation.
In terms of logistics trends, Hilton identified a surge in the adoption of technologies such as the Internet of Things (IoT) and blockchain, which enhance demand forecasting, inventory management, and improve overall supply chain transparency.
As the global trade environment continues to evolve, businesses must undertake strategic investments in supply chain resilience to harness growth opportunities while addressing risk. According to a survey by Accenture, executives noted missed revenue growth opportunities, which underscores the pressing need for operational resilience to compete effectively in the current market.
The innovations and adaptations in the logistics sector are also reflected in heightened government efforts to strengthen bilateral economic ties and streamline operations through trade agreements. Enhanced infrastructure projects and transport corridors within the Greater Mekong Subregion, for example, seek to bolster cross-border trade and improve logistical efficiency across the region.
As businesses remain focused on integrating technological advancements and developing robust supply chain strategies, the ongoing dynamics of international trade underscore the necessity for continuous adaptation in the face of unpredictability and change.
Source: Noah Wire Services
Subscribe to Industry Updates
