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Asia’s supply chain dynamics shifting in the wake of Covid-19

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Asia’s global dominance in the manufacturing supply chain remains solid, and China’s position at the top is unchallenged. Trade dynamics across APAC are shifting as companies are looking to minimise risks exposed by the Covid-19 pandemic. But before the global healthcare crisis, domestic policies and rise of protectionist agendas were high on the agenda. But the primary drive for change continues to be the escalating US-China trade war that is forcing global companies to review their supply chain strategies.

Even before the fallout of the Covid-19 global pandemic, manufacturing companies with supply chains across APAC were reacting to local, regional and global challenges.

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China is transitioning to a manufacturing hub of high value-added products and their domestic policies and investments are aligned to realise this ambition. On the infrastructure side, the unrivalled Belt and Road Initiative is set to impact trade routes through reduced shipping times between Asia and Europe and supporting China’s logistical connection to the rest of the world. This will see the emergence of new manufacturing and supply chain hubs, leading to shift of global logistic.

While the US-China trade war and COVID-19 will inevitably lead to some companies looking to move production of out China, the large domestic market, scale of production capabilities and integrated supply chains will ensure China’s global manufacturing position for years to come. As high-tech products increasingly become China’s focus, information security and IP protection will become the key issues impacting Swedish companies.

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