Southeast Asia is a top choice for firms diversifying supply chains amid U.S.-China tension
- Jun 23, 2024
- 1 min read
Amidst rising US-China tensions, global firms have seen increasing adoption of the "China Plus One" strategy to reduce dependence on China.
A significant beneficiary of the phenomenon is Southeast Asia: this approach has led to increased foreign direct investment in the ASEAN region, with significant inflows from the U.S., Japan, the EU, and China. Below are some examples.
Vietnam
Vietnam has become a key manufacturing hub for tech giants like Apple, producing MacBooks, iPads, and Apple Watches. Its proximity to China, competitive labor costs, and extensive free-trade agreements make it a preferred destination for diversified supply chains.
Malaysia
Malaysia has seen renewed investment in its semiconductor sector from companies like Intel and GlobalFoundries. Its skilled labor force and lower operating costs make it an attractive location for chip packaging, assembly, and testing. Additionally, Malaysia is drawing investments in data centers, solar, and EV-related components.
Indonesia
Indonesia is emerging as a significant player in the EV industry due to its abundant resources of essential minerals like copper and nickel. The government is incentivizing EV companies to establish local manufacturing bases, with major Chinese EV makers planning to start production by 2026.
Singapore
Singapore remains a top choice for regional headquarters and business expansions due to its stable regulatory environment and strategic location. Companies like TikTok and Shein have set up regional offices there, leveraging Singapore's robust financial and regulatory infrastructure to navigate geopolitical uncertainties.
Article by Sheila Chiang for CNBC. Read more here or in the PDF below.
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