As Asia bounces back post pandemic, businesses return to the question of how to diversify their supply chains outside of China and manage risk given the lessons learnt through COVID-19.
Across consumer electronics and semi-conductors, the answer for many has been to relocate part of their operations through investing in Thailand, Malaysia, Vietnam and Mexico. These regions are hotbeds of manufacturing, with continuous growth expected in the short to mid-term future.
Almost half of the US imports that shifted from China in the last two years have relocated to Vietnam, boosting Vietnam’s GDP by 7.9 percent. Vietnam has for some time been the largest manufacturing hub for Samsung and a growing hub for Foxconn as well as other third-party manufacturers. After relocating its display production from China to Vietnam in 2021, Samsung announced that it will be returning some its smartphone production lines to its Gumi plant in Korea, however investment in Vietnam will continue. Outside of Consumer Electronics, Vietnam is attracting attention in other areas of Consumer and this year saw Pandora and Lego decide in favour of creating their new production hubs in the country.
Malaysia continues to attract attention as a hub for semiconductors; AT&S will break ground with a new 2 billion USD production plant in Malaysia; which will be its first in Southeast Asia. Competition is high across the region, with Singapore and Taiwan also seeking to draw in investment in this space. The Taiwan Innotech Expo (TIE) 2022 will take place 13th-15th October with the view of building Taiwan as a global R&D hub and to attract talent and companies in the semi-conductor sector. Similarly, in 2021 Singapore attracted SGD 11.8 billion in fixed assets with Electronics and biomedical manufacturing the top two sources of investments with nearly SGD 5 billion and SGD 1.8 billion secured respectively.
MULTI-COUNTRY MANUFACTURING STRATEGY
The concept of a multi-country manufacturing strategy is no longer a new one. For the “lockdown wary”, these new locations are providing interesting alternatives to China but we have seen a number of wider hiring implications as a result:
- Setting up a legal entity in a new territory can be a time-consuming process resulting in delayed boots on the ground. Some firms are turning to Employer of Record (EOR) services to facilitate faster onboarding in new locations, but it can be costly, eating into talent budgets quickly.
- Recruitment processes that need to be realigned or restarted because of a lack of understanding of the local talent pool to begin with. Consider undertaking a market mapping exercise or compensation comparison report before starting your project.
- For many senior level or niche technical roles, relocating talent may be your best option, however, please speak to a relocation specialist (or us) before going down this route to understand the full costs of relocation including tax regulations, school structures, housing, etc. as the situation varies wildly across the region.
- Work with a hiring partner who knows the market and can advise on cultural norms and expectations that you may not be aware of. Going in blind will cost you time and potentially damage your brand in the market.
From a talent perspective, a key part of this process is to understand the challenges and opportunities from the beginning in terms of local talent capability and ease of attracting talent from overseas. We have been helping companies across a range of industries make these decisions for the past 12 years.
Be sure to follow us on Linkedin to stay up-to-date with all the latest trends and developments taking place across the end-to-end supply chain. Proco Global remains available to discuss any of the market conditions mentioned above and how we can help you find and retain the best talent out there. For more insights, visit https://www.procoglobal.com/insights
