4 Top Strategic Asia Sourcing Destinations
There isn't a clear conclusion to the Sino-American trade conflict. A lot of companies can't wait for the supply chain tariffing issues to ease. Finding alternatives to China manufacturing is a sound and proactive approach. Many supply chain managers are currently looking at risk/reward and have started new sourcing projects with Asian countries. It is difficult to calculate total costs for landing, which include logistics, logistics, transportation, payment terms, and cash flow.
THE INDIA ALTERNATIVE
Reforms to the economy in India have created the conditions for manufacturing innovations and a shift toward contributing significantly to global supply chains. In such a marketplace, India is more open to collaboration with the United States than some of its neighbors have been in recent years.
Is India the next China or India?
Since 2014, India's economy has been proactive in reforming its manufacturing sector. This was in the Make In India Act. This is complete disclosure. Make In India's primary goal was to train the developing nation to become a global marketing hub.
Pros and cons for India sources
Hopes and fears are raised due to the plans to bring India to the top in manufacturing. Some of the most successful outcomes would be as follows.
INDIA
Pros:
The company hiring would have lower labor costs.
Rising wages and better jobs create a more prosperous economic environment in Asia.
India would move from an emerging country to becoming a first-world country.
Cons:
It is essential to analyze the competitive advantages of India.
Delicate politics.
The minimum wage in India could increase as a result.
China is determined to retain its status as the world's leader.
China Belt and Road projects have an impact on other ally countries
SOUTHEAST ASIA Alternatives
In Southeast Asia, Vietnam, Taiwan, and Thailand are among the most highly developed in a variety of ways that give them advantages that their neighbors do not yet possess. They can quickly adjust to Westernized competition and workload. To support logistics and transportation infrastructure, it is readily available throughout the Pacific.
Stable governments and crucial roles in the cycle of trade ensure that all three countries are extremely attractive in terms of relocation. But, you have been aware of the implications and countermeasures. It looks inviting but there are also disadvantages to think about.
Pros and Cons of Southeast Asia
Making an accurate comparison for the supply chain shift to the Southeast Asia block is tricky. It is more complicated than India's politics.
A few of the pros comprise the following:
Construction of new infrastructure is on the rise
High tech revolution in the rural areas of lower Asia
Greater economic opportunities for the Pacific region's inhabitants
The small-block Asian countries don't have the same amount of manufacturing policy reforms as India. Some of these countries like Cambodia do not have the infrastructure required to permit massive migration of Chinese manufacturers across their border.
The China alternatives are available in the more developed Southeast Asian countries. Modern influences in Vietnam, Thailand, and Taiwan make them the most healthy choices.
The pros and pros and Vietnam, Thailand, and Taiwan
The three countries listed above are the top sourcing agent's options. But, there are limitations. Understanding the most effective and least concerns of each country will help your choice.
VIETNAM
Pros:
The manufacturing sector saw a 16% economic growth in August 2018.
It is expected to see a "stellar" increase in growth with the current economic activism.
Vietnam is forming a formidable group of Foreign Direct Investors.
Cons
Vietnam factories do not have the expertise that China/other nations have spent decades training in certain industries.
Vietnam has lower access than China to raw materials.
Vietnam has a smaller population than its neighbors to the south. This means that the number of workers is much smaller, and the amount of work that is delayed is higher.
THAILAND
Pros:
Thailand is the main hub for the ASEAN deal.
Thailand has an infrastructure of world-class that includes large-scale WiFi access and seven international airports.
It is regarded as one of the most stable and well-organized regions in Southeast Asia.
Cons:
The process of expanding business abroad is a complicated process that requires a paper trail.
Costs can be high However, hiring a personal Thai lawyer for a sourcing agent twist is advisable.
TAIWAN
Pros:
The economy is growing at a rapid pace. High tech is advancing. In 2016, Taiwan was ranked 18th globally for exports.
Cons:
Taiwan has a complex relationship with the main China that may influence their decisions on America.
MAKING AN INFORMED TRANSITION PLAN
No matter which country you decide to defer your supply chain There is one aspect you need to be aware of. Your exit strategy is just as important as the savings you make. The current political climate in the Pacific region is at a point where a flawed exit plan could lead to unstable situations similar to the tariff problem.
These are the principles to be followed when you move your supply chain from China to an alternative location.
Contact the advice of a China market relationship professional when possible to avoid an offense with existing trade partners.
Consult a lawyer in the country you are considering sourcing.
Consider the lowest wages for labor against the more extensive experience and infrastructure of more developed nations in your selection base.
If you pay close attention to alternative sourcing agencies' distinctive etiquette and follow these guidelines, your investment returns will be a roaring success. You can be sure that a Sino-American trade dispute doesn't have to place your business on hold.
About Author: Steven Cheng, the founder of Topworks Plastic Mold, a China injection molding company with the most complete services, from design to production. Topworks provides customers with a one-stop service for Polycarbonate injection molding and ABS injection molding. The company's professional team has excellent product knowledge of the plastics industry, which enables it to provide customers with quick responses and high-quality service.