The future of supply chains is poised for significant transformation, with a notable shift toward diversifying manufacturing and production locations throughout Southeast Asia. According to JLL both Southeast Asia and other developing economies in the APAC region are set to benefit from this trend. The China+1 strategy highlights the collaborative potential between China and Southeast Asian nations, where these countries are seen as complementary rather than competitive. This cooperative approach emphasizes mutual benefits, facilitating shared growth and development.
In recent years, many Chinese companies have been exploring opportunities to expand their manufacturing operations beyond China. This has led to the adoption of the China+1 strategy, where companies establish additional manufacturing bases in different countries to mitigate the risk of supply chain disruptions associated with reliance on a single nation. Yin Hong, Head of Logistics & Industrial at JLL China, emphasizes that this trend reflects a broader strategic move by Chinese firms to diversify their manufacturing footprint while capitalizing on the growth prospects in Southeast Asian economies.
As China shifts its focus towards strategic emerging industries—including high-end equipment manufacturing, semiconductors, electronics and IT, medical and life sciences, electric vehicles (EV), and new energy—there's an increasing emphasis on value-added sectors. In this context, Malaysia stands out as a prime opportunity due to its skilled labor force and established manufacturing sector, making it an appealing destination for investors seeking to expand their operations.
Key drivers behind this trend include not only the need for supply chain diversification but also the economic fundamentals of the region. With a large and growing population, a robust labor pool, favorable cost structures, and various investment incentives, Southeast Asia is positioned as a significant manufacturing hub for global markets, attracting investment from companies looking to establish a more resilient supply chain strategy.