Half of Asian High-Tech Companies Plan to Shift Trade Lanes Over Next Five Years

Now that labor costs in China are on the rise, high-tech companies in Asia are exploring alternative sourcing locations within the region, as well as in North America.

In fact, according to new research from UPS, half of all high-tech trade lanes in five years' time are expected to involve intra-Asia movements.

The annual survey, conducted by IDC Manufacturing Insights, polled senior-level decision makers at high-tech companies in the Asia Pacific region. The results show that:

19 percent of high-tech company respondents plan to source supplies and raw materials from North America in the next three to five years.

Currently, 42 percent source supplies and raw materials from mature APAC countries, including Thailand, Malaysia, Hong Kong and Singapore. More than half (55 percent) expect to do so over the next three to five years.

Likewise, 16 percent of those polled now source from emerging countries such as the Philippines and Vietnam, and even more (24 percent) plan to source supplies from these countries in the future.

Sustainability topped the list of initiatives expected to drive change in the supply chain in the next three to five years. Sustainability was cited by 24 percent of the respondents and ranked above well-known issues such as cost and responsiveness.

While sustainability is the top supply chain driver of change, cost reduction is the top business priority. As costs continue to increase throughout Asia, it's not surprising that the majority (63 percent) of survey respondents identified cost reduction as the top business priority for the next 18 months.

I was happy to see that nearly all companies (96 percent) participating in the survey reported having some sort of risk management plan in place. But and this is quite significant only a mere 11 percent said they had the resources or readiness to react in times of significant disruption. As a result, risk management/security was identified as the No. 1 "weak link" in high-tech supply chains in Asia, cited by 42 percent of survey respondents.

"As a consequence of continuing globalization and the lengthening of supply chains, any global economic, political, or environmental event could have far-reaching effects on the performance of companies," said Dr. William Lee, senior research manager at IDC Manufacturing Insights Asia/Pacific. "Moving ahead, we expect to see manufacturers placing greater emphasis on supply chain risk awareness and mitigation."

You can download an executive summary of the results from the Change in the (Supply) Chain survey here.

TAGS: Finance
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