Southeast Asia (SEA), which is situated at the intersection of important trade routes and sees US$3.4 trillion worth of global commerce flow through each year, has served as a focal point for collaboration between regional and international forces. Over the past few years, Southeast Asia has captured the attention of foreign countries for its prospective Supply Chain Landscape and Sourcing.
What is the potential that Southeast Asia holds? This article will provide a thorough look into the attributes of SEA and how Source of Asia Company can assist your business; with logistics acceleration.
1. Factors driving foreign companies to move to the Southeast Asia market
A. Overview of the Southeast Asian Supply Chain Market
Arsjad Rasjid, the chairperson of the ASEAN Business Advisory Council (ASEAN-BAC), stated with confidence that ASEAN should be the “supply chain of the world.”
Transnational occurrences like the pandemic and geopolitical tensions have put the world’s supply chains to the test and highlighted logistical disruptions. Manufacturers are moving their supply chains to strengthen their resilience, overcoming their reliance on a single location. Asia and the ASEAN area have become more popular as enticing choices for the following reasons.
Its expansion and increased intra-ASEAN cooperation have been made possible by the Association of Southeast Asian States (ASEAN) Economic Community, or AEC. Cross-border trade is encouraged by a number of free trade agreements between SEA countries and a reduction in tariffs in the area. Companies can navigate and expand with confidence in the varied area thanks to programs like the Southeast Asia Manufacturing Alliance and the Regional Comprehensive Economic Partnership, which connect them with a network of reliable partners.
Southeast Asian nations have more readily accessible skilled labor that is in plentiful supply chain and sourcing; and reasonably priced compared to other regions. Companies will be able to meet the rising demand throughout SEA with the aid of this varied talent pool. With a population of over 661 million and an estimated economic contribution of over USD 3.1 trillion in 2020, the ASEAN area enjoys a substantial demographic dividend.
The availability of a working-age population is the second reason. Governments of the respective countries are also implementing skill development programs specific to sub-segments within manufacturing and are also utilizing universities to produce skilled graduates in order to continuously upskill and upgrade the workforce to equip them with the necessary technological skills to meet the industry’s growing needs.
Lastly, the rapid development of infrastructure is what makes businesses want to migrate to nations in Asia and the ASEAN area. For businesses looking to establish operations in the area, the availability of industrial parks and designated manufacturing zones tailored to various sub-sectors of the manufacturing industry provide a complete manufacturing environment. Besides seaports and airports, nations’ governments are boosting investments to enhance their infrastructure and transportation systems further.
B. Vietnam – Rising star in Asia’s shifting supply chains
Vietnam’s supply chains have evolved significantly over the past few decades, driven by the country’s rapid economic growth and integration into global trade networks. The country has become a hub for regional supply chains, with many companies using the country as a base to manufacture goods for export to other Southeast Asian countries.
One of the critical strengths of Vietnam’s supply chains is the country’s low-cost labor. Additionally, the country’s favorable location, with access to major shipping lanes and proximity to key markets such as China, Japan, and South Korea, has made it an essential hub for regional supply chains.
2. Unlock the Power of Asia’s Suppliers with Source Of Asia
Looking for a reliable partner to help with sourcing in Southeast Asia? Source Of Asia (SOA) can be your best bet. Our local teams are headquartered in the economic heart of Vietnam and have developed tools and methods to search, benchmark, and continuously audit suppliers.
A. Market research
Our team begins by conducting extensive market research to determine which ASEAN country is most developed in your industry, allowing us to offer top potential countries that meet your specific needs.
To further streamline the process, we have developed two crucial steps that we follow closely:
- Identification: Our team conducts in-depth market research and long-listing to gather comprehensive information about factories, including their labor, manufacturing and exporting abilities, and more. We also work closely with you, our clients, to understand your specific criteria before moving on to the qualification step.
- Qualification: We use a combination of short-listing, RFI (Request for Information), and RFQ (Request for Quotation) to evaluate supplier ability, the cost and ensure the best fit for your project.
B. Make use of our network to contact and build a long-term relationship with suppliers
SOA identifies potential suppliers based on clients’ needs, prioritizing those with export experience and an established profile. We utilize a range of B2B meetings organization, negotiation, and follow-up processes. Our strong established network enables us to effectively connect with suppliers and ensure that our clients’ needs are met.
In addition to our extensive network, we work closely with associations such as VASI Hanoi and CSID in HCM under the Ministry of Industry and Trade in Vietnam to connect with projects. We also collaborate with other associations in different fields to expand our reach and find the best suppliers for our clients.
To date, we have built a database of 7500+ qualified suppliers and are always willing to explore creative solutions that meet your needs.
3. Final thoughts
The Southeast Asian market has become an attractive destination for foreign companies to establish their supply chains. The region’s strategic location, diverse economies, and abundant resources make it an ideal hub for manufacturing and trade. However, navigating the complexities of the market can be challenging. This is where Source of Asia (SOA) comes in, offering expertise in sourcing and supply chain management. With a deep understanding of the market and a vast network of reliable suppliers, SOA is well-equipped to help businesses unlock the power of Asia’s suppliers. By partnering with SOA, foreign companies can navigate the challenges of the Southeast Asian market and take advantage of the region’s vast potential.
