Vietnam emerges as an attractive alternative location for supply chain diversification

January 12, 2023 | 09:38

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According to a new global survey released by Germany’s Container xChange this week, businesses around the world deem Vietnam and India as attractive alternative locations for the diversification of their supply chains away from China this year.

Vietnam emerges as an attractive alternative location for supply chain diversification

More than 2,600 industry professionals from over 20 countries were surveyed about shipping and supply chain trends for 2023. The findings show that 67 per cent of respondents thought that Vietnam and India would emerge as functioning container shipping hubs this year and change the existing layout of the global transport industry.

The survey comes amid emerging indications that the two Asian nations are gaining popularity among businesses looking to reduce their reliance on China and diversify their supply chains.

Apple is looking into alternatives to China, such as India, to produce its iPhones. In the meantime, Foxconn and other Apple suppliers are expanding their production facilities in Vietnam. However, it will take time for capacity to be moved out of China. According to the report, the US still depends on China for hundreds of essential products including textiles, chemicals, and electronics.

Co-founder and CEO of Container xChange Christian Roeloffs said, “The overall outlook for the supply chain industry in 2023 remains challenging. Europe is being hit hard with all-time high inflation, China is struggling to cope with the virus, and the US continues to witness transportation challenges and unrest in the labour market. Most of these issues will remain in 2023. Consumer confidence will pick up, but it really depends on whether we witness more disruptions in the coming time.”

The majority of the experts surveyed believe that this year's disruptions will be most heavily influenced by inflation and the recession.

Spillover effects of supply chains on future growth

The trend of supply chains shifting from China to Vietnam in the past several years is confirmed to continue and if there are no crises in Asia-Pacific, this trend will continue for the next 10 years to come at least, though the shift from China to Vietnam will happen at different paces for different sectors. Electronics is probably the most impactful for the economy and the most fast-paced one. The situation in China has already pushed the big electronic players to find alternatives.

Business integrity passport to global supply chains

Experts are urging Vietnamese firms to incorporate integrity principles into their corporate governance since they believe business integrity would be the passport to global supply chains.

Evolving demand and supply chain norms

In early February, in the minds of most of us, COVID-19 was still a China-specific problem. Yet, the strict lockdown imposed early in China generated rapidly unprecedented chaos in global supply chains. We realised how weak these global networks were, and how much every economy is dependent on China’s manufacturing sector.

By Thanh Van

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