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Firms in Singapore delay investment, tweak supply chains in face of trade war: AmCham poll
IN the face of trade tensions between the United States and China, members of the American Chamber of Commerce in Singapore are delaying or cancelling investment plans, looking to other markets, and adjusting supply chains. In a survey of member firms conducted in November, 68 per cent of the 179 respondents said they were reviewing their business strategies in response to the trade war.
The most common move, taken by half of those who were reviewing their strategies, was delaying or cancelling investment decisions. But many are also looking for alternatives, including increasing their presence in other markets (40 per cent) and adjusting supply chains by sourcing components or assembly outside China (38 per cent) or outside the US (30 per cent).
Some firms are also mulling more dramatic moves, with 15 per cent considering relocating some or all of their manufacturing operations out of China, 10 per cent considering a similar move out of the US, and 5 per cent considering exiting China altogether.
In a panel discussion at the launch of the survey results on Thursday, however, expert vice-president in Bain & Company's Singapore office Gerry Mattios noted that business leaders are still largely taking a "sit back and wait" approach when it comes to taking concrete action. Even though firms may be re-evaluating their supply chains, shifting manufacturing operations is both expensive and difficult, he noted.
Trade tensions notwithstanding, the survey found cautious optimism about the business outlook. Though 78 per cent of all respondents expressed concern about the trade war, only 14 per cent had a negative outlook for the coming six months. The majority (56 per cent) had a positive outlook for the coming six months, with another 30 per cent staying neutral.
As for the impact on business in South-east Asia, only a quarter of respondents said they found it harder to do business in the region since the onset of the trade war. In fact, one positive side effect of the trade war may have been to raise the region's profile.
Two in five respondents felt that South-east Asia has become a more attractive place to do business, whether marginally (35 per cent) or dramatically (5 per cent), while another 36 per cent saw no change. Only 4 per cent thought the trade war had made the region less attractive.