Southeast Asia cannot expect to see a wide-scale divergence of supply chains moving to the region unless there are improvements in technology, capacity and regional integration, said HSBC.
There has been widespread sentiment that the supply chains of businesses are starting to shift to Southeast Asia en masse, on the back of the trade war and the region’s vitality, but there has been little evidence of that happening. HSBC Singapore CEO Tony Cripps said that if Asean wants to make that happen, it must create a stronger sales pitch.
HSBC said that rather than see a wide-scale shift to Asean due to trade tensions, multinationals are diverging in their supply chain strategies with a mixture of localisation, offshoring and re-shoring activity emerging. HSBC cited examples showing this trend, with companies such as Tesla choosing to move production into mainland China due to ease of business, technological sophistication and production reliability, while companies like Guizhou Tyres have expanded plans to build manufacturing plants in Vietnam, as China moves up the technological curve. Additionally, Western companies such as Intel are also re-shoring to be closer to home markets and higher-end technology.