Rising costs and geopolitics prompt the global supply chain to strengthen robustness, industry veteran says

Under the constant pressure from ongoing trade restrictions worldwide, many companies are concerned about sourcing their supplies from one manufacturer only, prompting a rethink of supply chains to build greater resilience and flexibility, says John Lundin, Co-founder of Super Dry International Pte Ltd.

Importers have begun asking their suppliers if they can supply products from multiple locations, according to Lundin, a seasoned partner with many manufacturers and suppliers in the supply chains as well as the logistics sector for over two decades. Some importers request guarantees from their suppliers that they can get the supplies locally, he adds. “Manufacturers therefore need to spread out their manufacturing to a couple of places so that they are able to supply from different countries.”

In response to emerging protectionist policies globally, an increasing number of manufacturers are building resilience into the supply chains and enhancing flexibility by diversifying production bases. “Trade volume in the regional supply chain has grown, as overall global trade with the US and Europe has been affected by geopolitics and protectionist policies,” Lundin says.

In Asia Pacific, the countries that comprise the Association of Southeast Asian Nations (ASEAN) now account for almost 8 percent of global exports, which is on a par with the US. This region has benefited from Chinese growth and the extension of value chains, thanks to the increased integration with China. ASEAN’s role as an export platform has been further enhanced in the context of the tensions between the US and China.

In the same way that global companies are diversifying supply chains, Chinese companies are moving manufacturing out of China. Some send components to other countries for production as part of their own manufacturing process, or they draw on production in the region for their own domestic market. China has been investing in Southeast Asia, particularly in manufacturing, reaching US$24 billion in foreign direct investment in the region in 2023.

Lundin says the manufacturing of simple products in China has been moved to Southeast Asian countries, like Vietnam and Indonesia. “I think China shifts some manufacturing to those countries. But don't forget that these countries purchase Chinese goods for their production,” he adds. “Indonesia’s biggest trading partner is China. Exporters in China may appear that they lose part of the American market as Asia is growing. The region has become a powerhouse of consumption of Chinese goods.”

China’s robust supply chain infrastructure

Since China adopted its “Open Door” policy in the late 1970s, the country has grown into a global manufacturing powerhouse characterised by its robust supply chain infrastructures.

Lundin points out that China’s established supply chain infrastructure enables the country to continue supplying parts and components to neighbouring countries for the production of finished goods. “Indonesia supposedly makes its own TVs, but actually they are just assembling components,” Lundin says. “When Thailand and Indonesia make cars, I guess more than 50 per cent of the components are imported from China.”

Meanwhile, China is enhancing supply chain resilience by adopting a technology-driven production model, significantly increasing its use of industrial robots, and leading in the production and export of essential battery components.

With production in Shenzhen, China, Lundin witnesses first-hand the country’s fast-paced industrial transformation. Enhanced productivity is the key. It has become increasingly capital-intensive and invests enormous resources in workers’ upskilling to handle high-tech production, he says. “China has accelerated its development in R&D and boosted investment in capital-intensive operations integrated with AI and robotics. Its production continues to meet the needs of different markets, with Indonesia as an example.”

Forging partnerships

The global supply chains are undergoing major transformation as manufacturers diversify production bases to satisfy buyers’ growing demand for goods from multiple sources. Many Exporters and importers alike need to navigate increasingly complex trade regulations and tariffs.

Amid the evolving global business landscape, Super Dry remains committed to supporting clients by building long-term partnerships and growing with them. Through digital innovation and technologies, the company aims to help its clients build and enhance resilience in the supply chains.

On the manufacturing front, Super Dry has diversified its manufacturing hubs in response to rising geopolitical tensions and tariffs. Headquartered in Singapore, Super Dry operates production plants not only in China, but also in Thailand, Indonesia, and India.

The company will put more resources into leveraging data analytics to provide customised moisture damage prevention solutions to its clients. “Nowadays the value of a company is the information you have, namely the data of your customers,” Lundin notes. “We have 30,000 customers globally and have collected lots of data about how we serve them. Data analytics and artificial intelligence will help us take care of them in a more efficient way.”

Work is also underway to centralise its global customer relationship management system (CRM) with Hong Kong as the hub. “Hong Kong is where we collect all the data globally because of the skilled labour,” he says.

Lundin says social media platforms, such as TikTok, are the future of business-to-business marketing and sales. He also foresees less business travel by its executives. To share in person its expertise with clients, existing and potential ones, the company will increase its participation in trade shows and conferences.

Trust is key to a long-term partnership. Super Dry has aligned its operations with clients’ pursuit of sustainability and ESG. Lundin says the company has integrated genuine sustainability practices and upholds transparency to clients and end-users. Its production is in strict compliance with international standards and has been certified by multiple international bodies.

Geopolitics, ongoing conflicts and extreme weather events are expected to continue reshaping the global business landscape. To stay competitive, companies have invested more resources into enhancing the resilience and flexibility of global supply chains by diversifying their production bases and sourcing, as well as investing in technologies and sustainable practices. Overall, these moves should contribute to increased robustness in global supply chains, Lundin believes.