May 24, 2024

Global business leaders are increasingly looking to India and Southeast Asia as alternative supply chain destinations while trade relations between China and the US deteriorate, according to a poll by PwC published on May 9.

The survey, targeting 150 senior executives across Asia, Europe and North America, showed these leaders will not disengage from the two major powers in the coming years, reported Nikkei Asia.

The poll, commissioned by asset manager Eastspring Investments and conducted in December and January, found that over the next decade, India will become the third most important link in companies' supply chains, up from fourth.

Southeast Asia will also move up one place in the supply chain pecking order to fifth.

In contrast, Germany will move back one place, to fourth, as will Japan, to sixth.

Southeast Asia will benefit most from the rebalancing in the electronics manufacturing sector while India stands to gain in the electronics manufacturing, and pharmaceuticals and medical equipment sectors, according to the survey.

The poll also showed that while companies "rebalance" their operations to enhance their supply chain resilience and avoid becoming overly dependent on a single market, executives expect the US and China to remain the top two supply chain hosts for "the foreseeable future."

With companies looking for alternative hosts, locations in the 10-member ASEAN region and India are set to gain.

According to the study, 47% of the business leaders who responded said boosting supply chain resilience is a key business priority, with 75% believing that rebalancing would cost less than the potential profits that would be put at risk by not rebalancing.

Respondents estimated that failing to rebalance their supply chains would put 19% to 24% of their profits at risk during the next 10 years, depending on the sector. In addition, 29% of those surveyed say rebalancing will provide opportunities to benefit from access to lower costs./.

Source: Vietnamplus

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