Supply Chain (SCM/SCE)

Supply Chain Management (SCM) & Supply Chain Execution (SCE) Software, Products & Solutions including Supply Chain Optimisation, hardware transport, supply-chain distribution software, freight software as well as load planning, vehicle routing & scheduling software in manufacturing and supply chain applications.

Supply chain reaction: trade war refugees race to relocate to Vietnam, Thailand

Fred Perrotta spent 4 years building a network of Chinese suppliers for his line of trendy backpacks

08-Jan-2019
Supply chain reaction: trade war refugees race to relocate to Vietnam, Thailand
Fred Perrotta spent four years building a network of Chinese suppliers for his line of trendy backpacks, but as soon as the United States announced tariffs on almost half of its Chinese imports, he started looking for suppliers in other countries.

That process is now so far advanced it would be too late to reverse it even if U.S. President Donald Trump and his Chinese counterpart Xi Jinping call a truce in their growing trade war at this week’s G20 summit, the 33-year-old said.

Perrotta’s company, Tortuga, is joining what industry experts say is the biggest shift in cross-border supply chains since China joined the World Trade Organisation in 2001.

The shift is creating stiff competition to secure new facilities in neighboring countries and rebuild supply chains outside of China, home to a fifth of global manufacturing.

“Everyone is nervous and scrambling around,” Perrotta said by phone from Oakland, California, where he recently took delivery of the first samples from a potential new supplier in Vietnam.

“Long-term, we will probably shift everything.”
The scramble is driven by the risk of more, and higher, U.S. tariffs on China, and fears that nearby emerging economies can only accommodate new businesses on a “first come, first served” basis.

Vietnam and Thailand are emerging as preferred destinations, but they still face capacity constraints ranging from red-tape to skilled labor and limited infrastructure.

FRENZIED ACTIVITY
Reuters interviews with more than a dozen company executives, trade lawyers and lobby groups in various industries revealed a frenzy of activity across Asia in recent months: executives are requesting product samples, touring industrial parks, hiring lawyers and meeting with officials.

In June, Hong Kong-listed furniture maker Man Wah Holdings (1999.HK) bought a factory in Vietnam for $68 million and said earlier this month it plans to almost triple its capacity to 373,000 square meters by the end of 2019.

“The acquisition is to mitigate the risks posed by tariffs,” Man Wah said in a statement.

Vietnam-based industrial real estate developer BW Industrial says inquiries have surged since October, and all its factories are now leased out.

“The manufacturers are from all over the world but they all have production plants in China and need to start production ASAP,” Chris Truong, a sales manager at BW Industrial told Reuters.

In Thailand, SVI Pcl (SVI.BK), which provides electronics and manufacturing solutions, said it has just selected four new deals worth about $100 million with existing customers who have operations in China.

“The trade war is good for us,” CEO Pongsak Lothongkam said. “We have been approached by so many companies that we have to prioritize.”

KCE Electronics (KCE.BK), Southeast Asia’s biggest maker of printed circuit boards (PCBs), has been contacted by U.S. companies who want to seek a new supplier to replace one in China, CEO Pitharn Ongkosit told Reuters.

“It’s a good opportunity. Many customers have contacted us to ask about our products and prices. But there are no sales yet as it will take time,” he said.

Stars Microelectronics Pcl (SMT.BK), another Thai electronics manufacturing services provider, is also getting new business.

“Two (or) three companies will start moving their production base (out of China) to us soon,” CEO Peerapol Wilaiwongstien said.

Cambodia is also attracting interest, with Parsippany, NJ-based bicycle maker Kent International Inc shifting Chinese production to the Southeast Asian country.

“We have a big business in the United States,” Arnold Kamler, the company’s majority owner and chief executive told Reuters. “There is no choice but to as rapidly as possible look to move production away from China.”

DISRUPTION
The re-sourcing and relocation efforts mark an acceleration of an already established trend as China’s economy shifts towards services, consumption and high-tech production.

“We are on the cusp of the biggest sourcing disruption that we have seen in a generation,” said Stephen Lamar, executive vice-president of the American Apparel&Footwear Association, whose more than 1,000 members contribute over $400 billion annually to U.S. retail sales.

“The No. 1 thing I hear from companies is along the lines of: ‘For years we have been talking about diversifying from China and now we have to actually do it’.”

Shifting production can take years to complete: firms need to secure funding, find the right suppliers, sort out new logistics - all while dealing with new legal and accounting issues in a country they may not know well.

Any relocation away from China is going to be very slow and very uncertain,” said Aidan Yao, senior Asia EM economist at AXA Investment Managers.

Low tech goods and low value manufacturing would be the quickest to migrate while higher value-added exports in the machinery, transport and IT category would likely take decades to relocate due to high R&D costs and competitive Chinese labor costs, UBS said in a note earlier this month.

Yet a regional client poll by Citi conducted in the last month showed more than half of them already adjusting their supply chain to limit upheaval to their business.

China’s sophistication in areas such as automation means no one country can replace China, said trade lawyer Sally Peng of Sandler, Travis&Rosenberg.

“So everyone is looking for that China Plus One, Plus Two, Plus Three country strategy, all the way to Africa,” she said.

Companies hold out little hope for a truce in the trade dispute when Trump and Xi are due to meet on the sidelines of the G20 summit in Buenos Aires this week.

Indeed, Trump said on Monday he expected to move ahead with raising tariffs on $200 billion in Chinese imports to 25 percent from the current 10 percent.

While Chinese export data shows little sign yet of an impact from the trade war, some economists say that is because companies are rushing to get shipments out ahead of more tariffs.

COLLATERAL VICTIMS
To be sure, smaller emerging Asian economies are not necessarily licking their lips about the prospect of the trade war between the world’s top two economies worsening.

Growth has slowed in the third quarter across Southeast Asia, as well as in Taiwan, Japan and South Korea, with officials partly blaming the trade war for it.

Thailand’s exports of electronic integrated circuits, for instance, rose 4 percent to the United States in October but fell 38 percent to China. Vietnam’s manufacturing sentiment indicator is the highest in Asia but is well off its peak.

A lack of infrastructure is also a problem for countries seeking to pick up business.

Thailand is 41st in World Bank infrastructure quality rankings, Vietnam is 47th, compared to China’s 20th ranking.

Bangkok is seeking to address that with its Eastern Economic Corridor, an ambitious $45 billion development project which plans improvements to deep water ports, airports and railways.

Beyond infrastructure bottlenecks, red tape - particularly in Vietnam - remains hard to navigate and skilled labor is not easily available.

Vietnam’s unemployment rate is 2.2 percent. Thailand’s is even lower.

“The proportion of unskilled labor in Vietnam remains large and there hasn’t been any effective plan to improve this issue, and I don’t see any significant change in five or even 10 years,” said the vice chairman of the Vietnam Electronic Industries Association, Nguyen Phuoc Hai.

“Whether cheap labor will remain one of Vietnam’s advantages in the face of the fourth industrial revolution is questionable.”

($1 = 32.9800 baht)

Reporting by Anne Marie Roantree, Farah Master, Noah Sin and Marius Zaharia in HONG KONG; Orathai Sriring in BANGKOK; Khan Vu and James Pearson in HANOI; Rajesh Kumar Singh in CHICAGO; Editing by Marius Zaharia and Lincoln Feast.

Original Release

One Network Enterprises Enhancements to Its Supply Chain Business Network for the Logistics Industry

Latest version provides thousands of companies with autonomous logistics and enhanced supply chain management capabilities

REPL Group Appoints EVP Americas as US Growth Builds Pace

REPL Group appointed Jon Hughes to the role of executive vice president (EVP) Americas as it continues to expand internationally

Hala Zeine Joins Celonis as Chief Product Officer

Former SAP Executive To Lead Product Strategy

Reynolds Adds Veeam to the Menu for Supply Chain Protection

The leading supplier of food to restaurant giants has chosen Veeam Availability Suite™ to protect critical data going into its supply chain

Seven Tips for Successful IBP Implementation

Quick guide to making sure that organisations are doing Implemented Business Planning (Advanced S&OP) right

Logistics and Supply Chain Managers Predict Panic Buying and Stockpiling Ahead of Brexit

New research highlighting economic concerns of seniors in the supply chain and logistics industry, on how a No Deal Brexit could effect the economy

Command Alkon Introduces CONNEX - The Supplier Collaboration Platform for Construction’s Heavy Work

CONNEX Reveals Unprecedented Insights for Critical Path Materials and Eliminates Inter-Company Silos so Partners Operate as One Unified Supply Chain

SCALA Expands Global Reach with New LLamasoft Partnership

The partnership gives SCALA and its clients access to LLamasoft’s cutting-edge supply chain modelling and decisioning technology

AEB launches Risk Assessment software

With easy online access for all departments the software solution identifies compliance risks before they can impact your business

Avetta Launches Marketplace for Supply Chain Contractors

Marketplace helps contractors reduce costs, improve performance and grow through exclusive access to discounts on safety-related products and services

Elemica Introduces Customer Portal Assistant with Self-Service Data Management

Low Cost Interoperability for Supply Chain Partners on Leading Customer Ordering Portal Solution Providers

Iptor Selects Curbstone Corporation as Preferred Payments Solution Partner

The Mesa Group designated as Premier Partner for integration and implementation services

Hyper-personalisation through demand-driven supply chains

Digital giants have been leading the way with latest technologies, including AI and real-time data to provide massively tailored products and services

Command Alkon Named Great Supply Chain Partner for 2nd Consecutive Year

Selected for Helping Companies in Construction Transform Their Supply Chains with Best-of-Breed Technology

Elemica Enables Zero Disruption to Supply Chain on SAP Upgrades

Interoperability Significantly Simplifies Time and Effort for Migration

Ryan Estis Slated as Opening Keynote Speaker for ELEVATE – Construction’s Heavy Work Conference

Ryan Estis Slated as Opening Keynote Speaker for ELEVATE – Construction’s Heavy Work Conference

SCALA continues growth with new executive appointment

The leading provider of management services for the supply chain and logistics sector with executive director

The business impact of the new PM’s approach

Smart procurement expert Alex Saric warns that businesses trading with the EU need to urgently review supply chain operations ahead of Brexit

ELEVATE - Construction’s Heavy Work Conference & Expo

Offering Extensive Educational and Business Performance Sessions that Deliver Value and Help Drive Success in Your Organization

Command Alkon Introduces supplyCONNECT Replenish to Simplify Receiving of Raw Materials for Ready Mix Producer

Automates Manual, Paper-Based Processes to Improve Accuracy and Collaboration

Research finds that 3PLs still lack innovation

Third-party logistics companies (3PLs) are lacking in proactivity and continuous improvement, according to the latest research

Businesses must urgently solve their e-commerce supply chain challenges to unlock the full value of this power

New DHL report reveals majority of companies have failed to fully implement an e-commerce strategy despite recognizing its importance

The Modern Supply Chain Must Be Flexible – How Does Yours Compare?

Effects of globalization, economic volatility, e-commerce and changing product mix and customer preferences on the traditional supply chain

Overcoming zero visibility in the M&S supply chain

How Marks and Spencer transforms food supply chain operations

AEB’s new Customs Heroes drastically simplifies customs clearance and international growth

Take your business into new markets. Cut costs in shipping and personnel.

Sainsburys, BOSCH and Dyson amongst speakers confirmed for leading supply chain debate

On 27th June with five speakers from supply chain and logistics leadership roles at some of the UK’s biggest brands.

Honeywell Launches Online Store to Streamline Access to Business-Critical Software

Direct access to discovering and purchasing Honeywell and third-party enterprise mobile apps

NetApp Revolutionizes Data Fabric to Dominate Hybrid Multicloud

Company gives customers the freedom to choose any cloud with one experience

Going, Going Greener

Bureau Veritas spearheads the importance of a sustainable supply chain on world accreditation day

The Story Behind Stopping Counterfeit Tobacco

New European Union regulations require tobacco manufacturers track products

Basketball Hall of Fame Selects Imagination Park’s Augmented Reality Solution

Basketball HOF to Launch First-Ever AR Fundraising Program this Summer

Zetes supporting the fightback of the illicit supply of tobacco

Six major Belgian tobacco manufacturers are working with Zetes to make their supply chain compliant with the revised Tobacco Products Directive (TPD)

Centiro with new Senior Vice President to lead North America expansion

Kevin Crough appointed to lead Centiro’s continued North America expansion

Are Retailers Waking up to the Supply Chain Visibility Imperative?

Supply chain research from Zetes followed by comments from Amir Harel, Zetes' General Manager of Visibility Solutions

A.G. Barr partners with SCALA to implement successful Demand Driven production

Cloud-based supply chain solution to improve product lines stability

Gartner Identifies the Top 8 Supply Chain Technology Trends in 2019

Analysts Will Explore Top Industry Trends at Gartner Supply Chain Executive Conference, May 13-16 in Phoenix, AZ

Call for Speakers Open for Construction’s Heavy Work Conference - ELEVATE

Seeking Submissions for Stories that Deliver Value and Help Drive Success across the Construction Industry

Manhattan Associates Reports Record First Quarter 2019 Performance

Company raises full-year Revenue and EPS guidance

BSI reports top supply chain themes for 2019

BSI SCREEN’s new report highlights the top challenges, developments, and trends likely to impact supply chains this year

Award Honors Dairy Brand’s Supply Chain Transformation Initiative

Logility Voyager Solutions™ as the platform for the digital supply chain optimization

Iptor announces launch of Mobile CRM Light

Add-on module fully integrated into core ERP solution DC1 to accelerate sales processes

Mitsubishi Heavy Industries Selects PTC Windchill to Drive Innovation and Improve Operational Efficiency

Advanced Capabilities of PTC Windchill Displace Competitive Product at MHIET

Butcher's Pet Care: transforming promotions and offers with SKUtrak

Butcher’s Pet Care, the UK’s number one canned dog food brand, has embraced a new way of working through SKUtrak.

Palletways London Appoints Experienced General Manager

Palletways London has appointed Colin Sturgess as its new general manager to develop the business in London, the South East of England and Europe

Asian manufacturing and logistics sectors power ahead with IoT adoption despite some concerns

New report reveals the readiness of Asian manufacturers and supply chain enterprises in the adoption of innovation in the IIoT

CHEP celebrate twelve years of injury-free working at Dublin plant

CHEP has celebrated twelve years of incident-free working at the company’s Dublin plant through an industry leading health & safety initiative

Government launches flagship auto supply chain programme – SMMT Industry Forum will support the delivery

New government-backed programme to improve UK manufacturing competitiveness and productivity is open for business

Mulberry Implements Aptos to Support Supply Chain Transformation

Live with Aptos Planning, the iconic British brand will implement Aptos PLM and Supply Chain Management solutions as a second phase of the program