Supply chain shocks spur resilient restructuring: Asia becomes the core stage for global manufacturing rebalancing.

From Efficiency to Resilience: The Asian Dimension of the Supply Chain Paradigm Shift

Since the pandemic, trade wars, and geopolitical conflicts have overlapped, the fragility of the "just-in-time" model has been exposed. Helium shortages in the semiconductor industry, disruptions in Red Sea shipping, and the US-China tariff confrontation have forced multinational corporations to reassess the global layout centered on minimizing costs. A recent special report by the Financial Times points out that companies are accelerating their shift toward more decentralized and regionalized models, and Asia—especially China, Southeast Asia, and South Asia—is at the epicenter of both the turmoil and the opportunities in this transformation.

Deglobalization? No, It's Reorganization

Global supply chains are not moving toward "deglobalization" but are undergoing a profound restructuring. Research by Beata Javorcik, Chief Economist of the European Bank for Reconstruction and Development, shows that under the pressure of tariffs on China, US companies are shifting procurement to countries such as Vietnam and Mexico, while reducing reliance on any single supply source. "Friendshoring" has not evolved into two opposing blocs but has instead formed a more decentralized supplier network. This trend is particularly evident in Asia: Vietnam, Thailand, and Malaysia are taking over electronics, textiles, and machinery manufacturing capacity transferred from China.

However, China itself is also actively participating in this restructuring. Zhao Xiande, Professor of Operations Management at the China Europe International Business School, points out that the "China+1" strategy is no longer just a choice for Western multinationals; more and more Chinese manufacturers themselves are setting up factories in Vietnam, Thailand, and elsewhere to meet global customers' requirements for a multi-country production layout. This "from the inside out" expansion is deepening supply chain linkages within Asia.

Regionalized Production: For Whom Does China Produce?

Richard Baldwin, Professor at the International Institute for Management Development in Lausanne, Switzerland, observes that the "shrinkage" of trade in goods has been underway since 2008. The G7's share of global manufacturing fell from roughly two-thirds in the late 1990s to 38% by the mid-2010s, stabilizing since then. Companies are increasingly inclined toward localized production models such as "China for China," "America for America," or "Asia for Asia"—that is, setting up factories near major consumer markets. This means Asia is no longer just the "factory of the world" but is becoming a production base serving its own vast consumer markets (especially China, India, and ASEAN).

Digital Twins and Stress Tests: Resilience as a Competitive Weapon

David Simchi-Levi, Professor of Engineering Systems at MIT, emphasizes that intuition and experience are no longer sufficient; companies need data and analytics to manage complex supply chains. The concepts of "time to recover" and "time to survive" he proposed are now used to measure the resilience of supplier networks. More and more Asian companies are investing in supply chain mapping tools and digital twin technology to identify hidden vulnerabilities and pre-plan contingency measures.Stanford Business School Professor Hau Lee goes a step further, proposing the concept of "hyper-agile" supply chains: companies like Shein and Temu leverage digital supply chains to achieve high-frequency, multi-variety product launches, shifting from passive response to active demand creation. However, this also brings environmental risks that require careful management.

The Slow Reality of Transformation and Future Challenges

Although both academic research and business practices are driving resilience, the pace of transformation is far slower than expected. Research by Professor Carlos Rodriguez of INCAE Business School in Costa Rica reveals that when restructuring supply chains, companies tend to adjust within existing supplier networks and familiar regions rather than searching globally. "You move because of cost, but you stay because of capability" — beyond low labor costs, skilled workers, reliable suppliers, and a stable business environment are equally critical. This raises the bar for Southeast Asian countries: they cannot rely solely on cheap labor to attract investment but must also enhance skills and infrastructure.

Professor Luc Van Wassenhove, Emeritus Professor at INSEAD, warns that many companies quickly reverted to old habits after the pandemic and still have not learned to examine their supply networks from a broader perspective. They remain confined to the narrow scope of their own operations, overlooking the wider ecological dependencies. The key to future supply chain management lies in full-network visibility and early risk identification — just as in the early days of the pandemic, many companies did not even know their level of exposure in Wuhan.

Asia's Opportunities and Responsibilities

The race for supply chain resilience is essentially a competition among ecosystems. For Asia, this is both a window to take over transfers and upgrade industries, and an opportunity to build more sustainable cross-regional networks. From China's "China+1" to ASEAN's "regional production center," from digital supply chain tools to the "hyper-agile" model, Asia is defining the next phase of global manufacturing in its own way.

The *Financial Times* points out that the era of efficiency supremacy is not entirely over, but visibility, resilience, and adaptability are becoming equally important. For Asian businesses and policymakers, how to embed redundancy and flexibility while maintaining efficiency will determine their position in the future global supply chain.

*This article is based on the report "Supply chain shocks fuel push for more resilience" published by the Financial Times in May 2025.*