The world is witnessing a supply chain revolution. The movement towards global production and consumption, often through cross-border value chains, has been accelerating in recent years. The future of this economy lies in Asia and the Pacific region. Countries such as China and Vietnam have caught up quickly, investing heavily in their physical infrastructure and human capital to take advantage of their strategic location. This article will explore how Asia can lead the world’s supply chain revolution by highlighting two key factors: trade cooperation and technology innovation.
A supply chain can be local or global, and it can include multiple industries and producers. A global supply chain refers to a supply chain that crosses national borders.
Asia is in a position to become the world’s leader in the supply chain revolution because of its strategic location and high-performing economies. China, for example, is rapidly becoming a global leader in the sectors such as information technology and aviation. Similarly, Vietnam has been investing heavily in human capital and infrastructure—helping it to become one of the most competitive manufacturing countries in the world.
The potential for Asia to be a leader in the global economy is huge: it is strategically located, has large quantities of natural resources and has high-performing economies. So what are the key factors that will drive Asia to lead the world’s supply chain revolution?
Both trade cooperation and technology innovation have been instrumental factors in Asia’s growth. It will be interesting to see if Asia can maintain its momentum as a growth engine for this global economy.
The Trade Side Of The Equation
Economies around the world are already dependent on the successful international trade of goods and services. Global trade volume is expected to grow 10.8% in 2021, revised up from 8.0% forecasted in March. Cross-border trade has been an integral part of the Asian economy for centuries. China has been a vital part of global trade for centuries, and countries such as Vietnam have long been a hub for global production.
Even when China’s economic growth slowed in 2020 due to the pandemic, it is still one of the wealthiest nations in the region and is an attractive location for manufacturing. For example, the manufacturing industry in China contributed 26.18% to the country’s GDP in 2020. This indicates there’s still a considerable demand for goods manufactured in China.
The Asian region’s manufacturing powerhouses, such as South Korea and Taiwan, have also been increasing their production of higher-value goods. For example, South Korea has “a supply of tech-savvy young people who are used to working for tech giants like Samsung.”
Asia, and the Pacific region in general, have a key advantage in this revolutionary economy: a strategic location. Asian countries are well positioned to take advantage of the global shift to cross-border value chains.
In addition to being able to take advantage of their location, Asian countries have been investing heavily in their infrastructure, which will greatly facilitate cross-border supply chains. In recent years, countries in the region have been building highways, bridges, railroads, ports, and other infrastructure as well as investing in education and training programs for their workforce.
Free Trade Agreements plays a key role in Asia’s supply chain efficiency. In total, countries such as China, Hong Kong, India, Japan, Indonesia, South Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam have 403 free trade agreements among them.
Furthermore, the region has invested heavily in research and development (R&D), including research on supply chain technologies such as blockchain and artificial intelligence (AI). These factors will help make Asia a leader in cross-border supply chains and the economic.
The Technology Side Of The Equation
Asia has benefited from its strategic location that links the two vastly different consumer markets in Europe and North America to key manufacturing hubs in East Asia. And the region’s rapid economic development has done much to make it a major player in the global supply chain.
But it’s not just physical infrastructure and human capital that’s driving Asia’s success in the supply chain revolution. Technology innovation in the region is also playing a significant role. Technology is being used to increase productivity, improve logistics, and enable seamless cross-border trade.
China in particular is leading this trend, investing in advanced robotics and other advanced technologies that are making the country increasingly competitive in the global market.
China has also established itself as a key player in the 5G mobile network arena, with Beijing reported that more than 392 million households in China are currently connected via 5G terminals. The country is also investing heavily in technologies related to artificial intelligence, cloud computing, big data, Internet of Things, big data internet, and other emerging technologies.
Japan is also playing an important role in Asia’s success in the supply chain revolution through its cutting-edge technological innovations. The country holds top spot for patents filed for automation technology, with Japan investing heavily into robotics and other related technologies.
Other countries throughout Asia are also taking steps to invest in technology.
In Southeast Asia in particular, local governments are focused on uplifting local manufacturing capabilities by implementing policies to encourage and support initiatives towards Industry 4.0. The Philippines Inclusive Industrial Strategy (i3S), Indonesia’s Making Indonesia 4.0, Malaysia’s Industry4WRD, Thailand’s 4.0 (S-Curve Industries), and Vietnam’s Future Digital Economy are all establish to integrate technology into the manufacturing industry and to increase labor productivity.
Asia has the potential to lead the world in supply chain innovation. The region’s countries are in a strategic position to capitalize on the global economy. More importantly, Asia’s economies are in a unique position to make the most of technology innovation. As the world’s population continues to grow and the global economy becomes increasingly interconnected, Asia will need to take a leading role in developing solutions. The combination of trade cooperation and technology innovation, as exemplified by China and Vietnam, will ultimately determine how successful Asia will be as a leader in this revolution.