Link by link: How the region can strengthen its supply chain capabilities  

ONE of the many lessons of the pandemic is that companies that diversified their supply chains – for example, by contracting with two or more sources for materials – rode out the economic storm better. In Asia, this strategy is sometimes known as “China+1” – meaning that while China will remain critical, there is increased scope for other Asian markets.

Supply chain disruption is inevitable, given the growing complexity of the global economy. One electronic parts maker told us, “When we move two or three parts, we create tens or hundreds of new supply chain links around the world.”

Due to economic, political and regulatory factors, supply-chain diversification is gaining traction, with companies across Asia adopting the China+1 approach. It is telling that foreign direct investment (FDI) in greenfield manufacturing in China dropped 17 per cent from 2019 to 2023, while it rose 20 per cent in South-east Asia.