Supply chain shifts to drive more manufacturing to Southeast Asia and India
Diversification of supply chains to create opportunities but will require companies to be flexible on factors including land selection. Singapore– The next decade will accelerate shifting supply chains whereby manufacturing and production locations will diversify to multiple locations across Southeast Asia and India. According to JLL,Southeast Asia and India stand to be net beneficiaries of companies diversifying manufacturing capabilities to complement existing bases in China, however, companies will need to be flexible when considering locations and funding options to take advantage of volatility in supply chains. Over the past few years, companies have begun exploring the relocation of manufacturing outside of China. In Asia Pacific, this near/re/friend shoring trend has resulted in the China+1 strategy where companies add additional manufacturing bases outside of China to hedge against supply chain disruptions by reducing reliance on a single country. According to JLL analysis, the impact has been mostly felt at the destination country, especially in Southeast Asia and India. As a result, governments are supporting these opportunities and implementing more policies that aim to boost their local manufacturing industries, placing a premium on land availability and access to capital sources. “Diversification within supply chains is a natural step for companies involved in manufacturing within the wider economic lifecycle of this region. We see Southeast Asia and India representing a natural complement to the existing production strength of China but feel that for companies to respond quickly to supply chain shifts, they need to adopt a flexible mindset towards land selection and funding options,” says Michael Ignatiadis, Head of Manufacturing Strategy, Asia Pacific, JLL. The driving force behind this trend is not only the need for supply chain diversification, but also to capitalise on the strong economic fundamentals of this region, including a large population and labour pool, favourable costs, and various incentives. […]