In 2024, the industrial chain in the Asia-Pacific region is undergoing an unprecedented wave of reconstruction. Driven by global geopolitical changes, technological innovation waves and cost structure reshaping, the traditional industrial chain layout is accelerating its evolution. On the one hand, Southeast Asian countries are undertaking a new round of industrial transfer by virtue of their demographic dividend and active industrial policies; on the other hand, Northeast Asian economies such as Japan and South Korea are focusing on promoting industrial upgrading and climbing up the value chain. At the same time, India and other South Asian countries are also accelerating the layout of future industries and creating new growth poles. In this profound industrial transformation, how can companies seize opportunities, avoid risks, and achieve sustainable development? This article will provide enterprises with systematic analysis and suggestions from the driving factors of industrial chain reconstruction, changes in regional layout, and the evolution of key industries, etc., to help enterprises with their industrial layout, transformation and upgrading in the Asia-Pacific region.

The background and driving force of the reconstruction of the Asia-Pacific industrial chain

In recent years, the industrial chain in the Asia-Pacific region has been undergoing profound reconstruction. This transformation process is mainly driven by three core factors. The first is the dramatic change in the global geopolitical landscape. The strategic competition between China and the United States continues to deepen, especially in strategic industries such as semiconductors and new energy. The competition between the two sides has extended from the trade level to technology, talent and industrial chain control. In early 2024, the U.S. Department of Commerce further tightened controls on semiconductor exports to China, prompting more companies to begin to reassess their supply chain layout. At the same time, the in-depth implementation of the Regional Comprehensive Economic Partnership (RCEP) is reshaping the regional trade pattern. Data shows that the trade volume between RCEP member countries will increase by 18.7% year-on-year in 2023, and regional industrial synergy will be significantly enhanced.

Supply chain security has become a core consideration in the strategic layout of various countries. The “Economic Security Promotion Law” launched by the Japanese government at the end of 2023 provides subsidies of up to 2 trillion yen to support companies in transferring key industrial chains to “friendly countries.” South Korea has also launched a “Supply Chain Resilience Improvement Plan” to focus on supporting the local development of strategic industries such as semiconductors and batteries. These policy adjustments are promoting the regional and diversified development of the industrial chain.

Technological innovation is the second largest driving force for industrial change. In terms of digital transformation, according to IDC’s latest forecast, digital transformation spending in the Asia-Pacific region (excluding Japan) will reach US$678 billion in 2024, a year-on-year increase of 17.6%. Among them, the integrated application of industrial Internet of Things, artificial intelligence, 5G and other technologies is reshaping the production model of traditional manufacturing. Green and low-carbon transformation is accelerating, and the ten ASEAN countries have pledged to increase the proportion of renewable energy to 35% by 2025, driving the rapid development of the new energy industry chain. In terms of upgrading smart manufacturing, Singapore’s “Smart Nation 2025” plans to invest S$20 billion to promote the digital transformation of the manufacturing industry, and its experience is being learned by other countries in the region.

Cost structure changes are the third key driver. In terms of labor costs, the average manufacturing wage in China’s coastal areas has reached about US$800 per month, while it is only US$300-400 in Vietnam and US$250-350 in Indonesia. This difference is driving the transfer of labor-intensive industries to Southeast Asia. The price fluctuations of raw materials have intensified, and the prices of lithium battery raw materials will fluctuate greatly in 2023, prompting companies to speed up the diversification of supply chains. In terms of logistics cost reconstruction, affected by fluctuations in international oil prices and changes in shipping prices, the regional logistics network is being restructured. It is worth noting that with the strengthening of regional railway network connectivity, the importance of land transportation in regional supply chains has increased significantly. The construction of the Malaysia-Thailand-China cross-border railway network is expected to reduce regional logistics costs by 15-20%.

Governments are actively responding to these changes. The “Manufacturing 4.0 Roadmap” implemented by Indonesia provides tax incentives and land support to attract foreign investment to set up factories. Vietnam has launched the “Industry 4.0 Strategy 2030” and plans to increase the digitalization rate of manufacturing to 40% by 2025. Malaysia’s “Thirteenth Malaysia Plan” focuses on the development of high-tech manufacturing and provides subsidies of up to 70% of R&D expenses.

These changes bring opportunities and challenges to enterprises. It is recommended that companies should:

• Establish an industrial chain vulnerability assessment mechanism and conduct regular supply chain risk assessments
• Formulate a “regional + multi-point” industrial layout strategy to balance efficiency and safety
• Increase investment in technological innovation, especially in the fields of digitalization and intelligence
• Establish a flexible cost management system to respond to various cost change risks

Practice shows that companies that can accurately grasp the trend of industrial chain reconstruction and adjust their strategies in a timely manner can often seize the opportunity in the reform. For example, a leading global electronics manufacturer successfully optimized and upgraded its industrial chain by deploying new factories in Vietnam and India and setting up an R&D center in Singapore, achieving a 15% revenue growth in 2023.

Analysis of key industrial chains

In the process of restructuring the Asia-Pacific industrial chain, the three major industrial chains of electronic manufacturing, new energy and biomedicine have shown the most significant changes.

In terms of the electronic manufacturing industry chain, the semiconductor industry is undergoing a new round of layout adjustment. The global semiconductor industry will reach US$574 billion in 2023, of which the Asia-Pacific region will account for more than 60%. TSMC’s first wafer fab in Kumamoto, Japan, has been put into operation in early 2024. It plans to have an annual production capacity of 55,000 12-inch wafers, mainly producing 28nm to 12nm process chips. The South Korean government launched the “K-Semiconductor Strategy 2.0” and committed to investing more than 500 trillion won in the next five years to create the world’s largest semiconductor supply chain cluster. In the field of consumer electronics manufacturing, Vietnam has become the world’s second largest exporter of smartphones, with exports reaching US$66 billion in 2023. Through the “Made in India” plan, India has successfully attracted the transfer of Apple’s industrial chain. It is expected that by 2025, India will produce 25% of the world’s smartphones. In terms of the electronic components supply chain, Penang, Malaysia has formed a complete passive component industry cluster, with exports increasing by 22% year-on-year in 2023.

The new energy industry chain is developing rapidly. In terms of photovoltaic industry, Vietnam has become the largest solar cell production base in Southeast Asia, with a production capacity of 25GW in 2023. Through the “Solar Alliance Plan”, India plans to build 100GW of solar installed capacity by 2025 to drive the development of the local photovoltaic industry. In the field of electric vehicle supply chain, Indonesia is building a complete battery industry chain with its rich nickel ore resources and has attracted more than US$15 billion in investment. Thailand has launched the “EV Hub” strategy and aims to achieve 30% of electric vehicle production by 2025. In terms of energy storage equipment manufacturing, South Korea plans to invest US$35 billion by 2030 to create the world’s largest energy storage industry base. Japanese companies remain ahead in the research and development of solid-state battery technology, and Toyota expects to achieve mass production of solid-state batteries in 2025.

The biopharmaceutical industry chain shows the characteristics of equal emphasis on R&D and manufacturing. In terms of the layout of pharmaceutical R&D centers, Singapore, relying on its strong biopharmaceutical R&D ecosystem, has attracted 18 of the world’s top 20 pharmaceutical companies to set up regional R&D centers. The Songdo Biomedical Cluster in Incheon, South Korea, will invest US$2.7 billion in R&D in 2023, focusing on the development of cutting-edge fields such as cell therapy and gene therapy. The pattern of API production bases has undergone significant changes. India has become the world’s largest producer of generic drugs, with an annual output value of more than US$42 billion. Vietnam has formulated the “Pharmaceutical Industry Development Plan 2030” and plans to increase the self-sufficiency rate of raw materials to 45%. In the field of medical device manufacturing, Malaysia has become the world’s largest medical glove production base, with a market share of more than 65%. Japan continues to lead in the manufacturing of high-end medical imaging equipment, with exports reaching US$8.9 billion in 2023.

Based on the above industrial chain evolution trends, companies need to adopt differentiated ideas when formulating regional layout strategies. In the field of electronic manufacturing, northern Vietnam is suitable for setting up assembly bases with its complete industrial supporting facilities and relatively low labor costs; while the technological innovation center represented by Bangalore in southern India is more suitable for setting up R&D institutions, and at the same time, it can be used to develop deep roots in India. market. Malaysia, especially the Penang region, has unique advantages in the production of high-end components and can serve as an important supplement to the industrial chain.

The layout of the new energy industry should make full use of the resource endowments and policy advantages of each country. Indonesia’s rich nickel ore resources and active industrial policies make it an ideal battery material production base. Thailand’s sound automotive industry foundation and clear electrification transformation plan provide a good environment for the manufacturing of electric vehicles. Considering Japan’s technology accumulation in the field of new energy, cooperation with local companies in cutting-edge technology research and development will help maintain its innovation advantage.

The biopharmaceutical industry should adopt a two-wheel drive strategy of “R&D + manufacturing”. Singapore’s strong R&D ecosystem and intellectual property protection system make it an ideal choice for setting up an R&D center. India’s mature API industry cluster and competitive production costs are suitable for establishing large-scale production bases. Malaysia’s specialization and quality control capabilities in medical device manufacturing provide reliable guarantee for the manufacturing of related products.

During the specific implementation process, enterprises need to pay special attention to comprehensive cost factors. Taking electronic manufacturing as an example, although Vietnam has obvious advantages in labor costs, imperfect supporting industries may bring higher logistics costs. Therefore, companies need to conduct a comprehensive cost-benefit analysis when selecting a location, taking factors such as labor, land, logistics, and taxes into consideration. At the same time, it is also crucial to pay close attention to changes in industrial policies in various countries. For example, India’s newly launched Production Incentive Plan (PLI) provides manufacturing companies with sales subsidies of up to 6%. Such policy dividends can often significantly affect investment returns.

Changes in regional layout

The industrial layout in the Asia-Pacific region is showing a new pattern of coordinated development among the three major regions of Southeast Asia, South Asia and Northeast Asia. Relying on its unique advantages, Southeast Asia is undertaking a new round of industrial transfer. Vietnam’s industrial upgrading has achieved remarkable results, with foreign direct investment reaching US$38.6 billion in 2023, a year-on-year increase of 32%. The Hanoi-Haiphong Industrial Corridor in the north has formed a complete electronics manufacturing industry cluster, and global manufacturing giants such as Dell and Foxconn continue to increase investment. At the same time, Vietnam is actively promoting digital transformation. The digital economy is expected to account for 20% of GDP in 2024, providing new momentum for industrial upgrading.

As the largest economy in Southeast Asia, Indonesia continues to unleash its market potential. Its “Roadmap for the Fourth Industrial Revolution” plans to invest 400 trillion Indonesian rupiah by 2025, focusing on the development of emerging industries such as electric vehicles and renewable energy. Especially in the battery industry chain, relying on abundant nickel ore resources, it has attracted more than 20 billion US dollars in investment, and it is expected to form a battery production capacity of 200GWh by 2025. Malaysia has formed a unique advantage in the high-tech manufacturing field, and its exports of electronic and electrical products will exceed 400 billion ringgit in 2023. Penang has developed into an important global semiconductor packaging and testing base and is also highly competitive in the field of medical device manufacturing.

South Asia is emerging as a new global manufacturing hub. India’s “Rise of Manufacturing” strategy has achieved remarkable results, with the manufacturing sector’s contribution to GDP increasing to 18% in fiscal 2023. Its mobile phone manufacturing capacity is expanding rapidly, with output reaching 310 million units in 2023, and exports increasing by 141% year-on-year. India also provides subsidies totaling nearly 2 trillion rupees in 14 key areas such as semiconductors and new energy through the “Production-Linked Incentive Plan” (PLI) to attract the layout of the global industrial chain.

Bangladesh has shown strong competitiveness in labor-intensive industries, with apparel exports reaching US$52.6 billion in 2023, ranking second in the world. The “Digital Bangladesh Vision 2025” launched by the government is improving the business environment and accelerating the digital transformation of industries. Pakistan attracts foreign investment through the “Special Economic Zone Plan”, but due to the political and economic environment, industrial development still faces challenges.

Northeast Asia is focusing on promoting industrial transformation and upgrading. Through the “Society 5.0” strategy, Japan is actively deploying cutting-edge fields such as artificial intelligence and quantum computing. In 2023, R&D investment will account for 3.7% of GDP. In the semiconductor field, the Japanese government has provided approximately 700 billion yen to support companies such as TSMC and Sony in building advanced process fabs and revitalizing the semiconductor industry. South Korea has released the “2030 Industrial Transformation Roadmap” and plans to invest approximately 1,000 trillion won in the next five years, focusing on the development of strategic industries such as semiconductors, biomedicine, and artificial intelligence. Among them, the semiconductor field plans to create a world-class industrial cluster and is expected to increase its global market share to 40% by 2030.

Taiwan is focusing on promoting the integration and upgrading of the industrial chain. The semiconductor industry ecosystem led by TSMC continues to strengthen its global competitiveness, while actively deploying in Japan, the United States and other regions to achieve global development. Under the guidance of the “5+2 Innovative Industry Plan”, Taiwan is accelerating the digital transformation of industries, and emerging industries such as the Internet of Things and artificial intelligence are developing rapidly.

Based on regional development trends, companies need to pay attention to differentiated layouts when formulating investment strategies. In Southeast Asia, Vietnam is suitable for the development of electronic manufacturing, Indonesia is suitable for the deployment of new energy industries, and Malaysia is suitable for the development of high-tech manufacturing. South Asia focuses on India, which can rely on its market size and policy support to lay out R&D and manufacturing bases. In Northeast Asia, we should focus on technological cooperation and innovation, and seize the development opportunities of Japan and South Korea in the field of cutting-edge science and technology. At the same time, enterprises need to establish a flexible supply chain management system to achieve reasonable allocation of production capacity and effective risk management and control among different regions. Especially in the current context of increasing global economic uncertainty, a diversified regional layout strategy will help enhance the company’s risk resistance and sustainable development capabilities.

Enterprise response strategies

In the context of the restructuring of the Asia-Pacific industrial landscape, companies need to build new competitive advantages from three dimensions: supply chain optimization, technology upgrading and localized operations.

In terms of supply chain optimization, diversified procurement strategies have become a key measure for companies to deal with geopolitical risks. According to McKinsey’s 2024 research report, global manufacturing companies achieve dual or multi-source supply of 40% of key components on average. Taking the electronics manufacturing industry as an example, leading companies usually establish complementary supplier networks in different countries such as Vietnam and India, and the proportion of purchases from a single supplier is controlled below 30%. In terms of inventory management, companies are adopting more flexible dynamic inventory strategies, generally increasing safety stocks of key raw materials and core components to 45-60 days. By introducing artificial intelligence forecast models, companies can increase demand forecast accuracy by 15-20% and significantly reduce inventory costs. In terms of smart logistics layout, the establishment of regional logistics centers needs to match the trend of industrial transfer. For example, in Southeast Asia, companies generally choose to set up regional logistics centers in Singapore and Malaysia to improve logistics efficiency by more than 30% through intelligent warehousing systems.

Technology upgrading has become the core driving force for enterprises to maintain competitiveness. In terms of digital transformation, companies are accelerating the construction of industrial Internet platforms and realizing real-time monitoring and optimization of production processes through 5G, Internet of Things and other technologies. According to Deloitte Consulting data, investment in digital transformation by manufacturing companies in the Asia-Pacific region will increase by 35% year-on-year in 2023, of which investment in industrial Internet projects will account for 42%. In terms of automation transformation, the density of robots continues to increase. The number of robots per 10,000 employees in South Korea has reached 1,000, and Singapore, Japan and other places are also advancing rapidly. In newly built factories, the automation rate generally reaches more than 65%, effectively coping with the pressure of rising labor costs. In terms of investment in R&D and innovation, leading companies generally spend 4-6% of their revenue on R&D, focusing on cutting-edge areas such as artificial intelligence, new materials, and new energy. Among them, the number of multinational companies setting up R&D centers in India will increase by 25% in 2023, and the average R&D investment will increase by 40%.

Localized operations strategies need to be more in-depth and systematic. In terms of talent localization, companies are increasing efforts to cultivate local management talents and have generally set up special talent development projects. Taking Vietnam as an example, the proportion of localized management talents in foreign-funded enterprises has increased from 35% in 2020 to 55% in 2023, and is expected to reach 70% in 2025. The key is to establish an effective training system and accelerate the growth of local talents through “mentorship systems” and other methods. In terms of supplier cultivation, leading companies usually adopt a combined “bringing in + going out” model to enhance the capabilities of local suppliers through technical guidance, quality management system certification, etc. For example, in India, through the supplier development program, the quality compliance rate of local suppliers increased by 40% in three years. In terms of market channel construction, it is necessary to fully integrate local consumption characteristics and build a channel network that integrates online and offline channels. In Indonesia, companies usually cooperate with local e-commerce platforms to quickly expand market coverage, and at the same time establish experience centers in key cities to enhance brand influence.

To ensure the effective implementation of these strategies, companies need to establish a complete implementation mechanism. First, a dedicated regional strategic management team should be established to coordinate the advancement of various initiatives. Secondly, establish a clear assessment indicator system to include supply chain optimization, technology upgrading, localized operations, etc. into the assessment scope. Third, strengthen risk management, especially establishing corresponding risk prevention and control mechanisms in aspects such as supplier selection, technology introduction, and talent training. Finally, maintain strategic flexibility and promptly adjust specific implementation strategies according to market changes.

Enterprises should also make full use of the industrial policy support of various countries. For example, India’s Production Incentive Plan (PLI), Vietnam’s preferential policies for high-tech enterprises, and Malaysia’s Industry 4.0 matching funds, etc., can provide important support for enterprises’ technology upgrading and production capacity layout. At the same time, actively participating in regional economic cooperation mechanisms, such as supply chain cooperation under the RCEP framework, can expand greater development space for enterprises. By systematically implementing these strategies, companies will be able to seize opportunities in the restructuring of the Asia-Pacific industrial landscape and achieve sustainable development.

Risks and Challenges

Companies doing business in the Asia-Pacific region face multi-dimensional risk challenges and need to establish a comprehensive risk prevention and control system. Based on the latest market research and practical experience, this chapter will provide an in-depth analysis of the main risk categories and provide targeted response suggestions.

In terms of policy risks, uncertainty in trade policy continues to increase. Since 2023, India has adjusted its import tariff structure for electronic products, raising tariffs on some products to 20%, which directly affects the cost structure of enterprises. ASEAN countries are also strengthening trade remedy measures, and the number of anti-dumping investigations in 2023 will increase by 35% year-on-year. Enterprises need to closely track the trade policy trends of various countries and establish early warning mechanisms. It is recommended to establish policy research teams in key markets and maintain close communication with industry associations to identify policy risks in advance. At the same time, industrial policy adjustments also bring new challenges. For example, Vietnam is tightening access conditions for energy-intensive industries, and Indonesia requires an increasing proportion of deep processing of mineral resources. Enterprises need to fully assess policy continuity when making investment decisions and incorporate adjustment costs into investment income calculations. Increasing environmental protection requirements have become a regional trend. India plans to increase the proportion of renewable energy to 40% by 2025, and Malaysia has proposed to impose a carbon tax starting in 2024. Enterprises should proactively deploy green technologies and transform environmental protection facilities in advance. It is expected that related investments will account for 3-5% of revenue.

Among operational risks, labor issues deserve particular attention. Many provinces in Vietnam have recently raised their minimum wage standards, with an average increase of 8%. India’s new labor code has strengthened the protection of employees’ rights and interests. Enterprises need to optimize their human resources strategies, and it is recommended to take the following measures: improve the level of automation to reduce dependence on labor, establish a flexible working hour system to cope with order fluctuations, and strengthen employee training to improve production efficiency. Management conflicts caused by cultural differences cannot be ignored. According to statistics, 35% of M&A projects by multinational companies in the Asia-Pacific region did not meet expectations due to cultural integration failures. It is recommended to establish a cross-cultural management team, conduct systematic cultural training, respect local customs, and adopt localized management methods. There are still regional differences in intellectual property protection, and some countries have insufficient enforcement. It is recommended that enterprises establish a complete intellectual property layout, apply for patent protection in core technology countries, establish cooperative relationships with local intellectual property agencies, and protect rights through legal means when necessary.

Market risks present new characteristics. Exchange rate fluctuations have intensified, with currencies such as the Indonesian rupiah and Indian rupee fluctuating by more than 10% against the US dollar in 2023. It is recommended that enterprises adopt diversified exchange rate risk hedging strategies: rationally use financial instruments such as forward contracts and options, promote localized procurement to reduce exchange rate exposure, and appropriately adjust product pricing mechanisms. Competition is becoming increasingly fierce, local companies are rising rapidly, and investment in technology research and development and marketing network layout have been significantly strengthened. The market share of local mobile phone brands in India will increase from 16% in 2020 to 25% in 2023, and the market share of local Korean cosmetics companies in Southeast Asia will increase by 3 percentage points annually. Enterprises need differentiated competitive strategies: increase R&D and innovation efforts, improve product technology content, deepen localized marketing, and establish brand advantages. Demand changes are accelerating, and consumer preferences show significant regional characteristics. For example, Indonesian consumers have strong demand for halal-certified products, Indian consumers pay more attention to cost-effectiveness, and Singaporean consumers have higher requirements for product safety. Enterprises need to strengthen market research, adjust product strategies in a timely manner, and may consider using modular design to meet different market needs.

In order to effectively deal with the above risk challenges, it is recommended that enterprises build a “three-in-one” risk management system:

First, establish a risk early warning mechanism. Establish a special risk management department, conduct regular risk assessments, and establish a risk level classification management system. Use big data analysis and other tools to improve the accuracy and timeliness of risk identification.

Second, improve risk prevention and control measures. Formulate specific response plans for different types of risks, allocate necessary resources, and clarify responsible departments and disposal processes. It is recommended to incorporate risk management into the performance appraisal system to improve risk prevention and control awareness at all levels.

Third, strengthen crisis management capabilities. Set up a special crisis management team, conduct regular emergency drills, and establish communication channels with local governments, media, and industry associations. At the same time, we will strengthen the summary of experience and continue to optimize the risk management system.

Finally, enterprises should also make full use of financial instruments such as insurance and guarantees to transfer risks, establish cooperative relationships with professional institutions, and improve overall risk management levels. Through systematic risk management, companies can maintain steady development and achieve sustainable growth in an uncertain market environment.

Future Prospects and Suggestions

In terms of forecasting industrial development trends, in the short term (1-2 years), the industrial structure in the Asia-Pacific region will show an accelerated adjustment trend. It is expected that by 2025, Southeast Asia’s manufacturing output value will achieve an average annual growth of 15%, of which Vietnam’s electronics manufacturing industry will grow at a rate of 25%. The trend of supply chain localization is obvious, and the proportion of intra-regional procurement is expected to increase to 65%. In the mid-term (3-5 years), the transformation will be more in-depth and digital transformation will be fully launched. According to PwC’s forecast, the industrial Internet market in the Asia-Pacific region will reach US$850 billion by 2027, with an average annual growth rate of 28%. Automation and smart manufacturing will be accelerated in countries such as India and Malaysia, and robot density is expected to increase by 20% annually. The long-term (5-10 years) layout will focus on industrial upgrading. It is expected that by 2033, multiple world-class industrial clusters will be formed in the Asia-Pacific region. India is expected to become the world’s third largest economy, with manufacturing accounting for 25% of GDP. Southeast Asia will develop into an important new energy industry base in the world, with a production capacity of more than 1,000GWh.

In terms of investment opportunity analysis, key industries show differentiated development characteristics. The new energy industry chain has significant advantages. It is expected that by 2026, the annual production capacity of electric vehicles in Southeast Asia will reach 3 million units, and the investment demand for supporting industries will exceed US$50 billion. In the field of high-end manufacturing, Malaysia’s semiconductor industry is expected to maintain a growth rate of more than 20%, and the scale of India’s electronics manufacturing industry will exceed US$300 billion. In terms of regional investment value, northern Vietnam is suitable for the development of electronic manufacturing and has attracted more than 100 global suppliers; central Indonesia is suitable for the development of new energy industries, benefiting from rich nickel ore resources; western India is suitable for the development of the automobile and parts industry. The cluster effect is obvious. Among emerging markets, Bangladesh is accelerating industrial upgrading and is expected to see an average annual growth rate of 25% in manufacturing investment by 2025; the Philippines’ digital economy is developing rapidly, with the e-commerce market growing at an average annual rate of 35%.

Regarding corporate action suggestions, first of all, in terms of strategic planning, it is recommended to adopt a “core + satellite” layout model. Use core factories to drive the development of supporting enterprise clusters, such as setting up regional headquarters and R&D centers in Vietnam, and laying out production bases in neighboring countries. A progressive plan will be adopted in terms of investment pace. The initial investment scale will be controlled at 30-40% of the total plan, and investment will be gradually expanded based on market performance.

In terms of implementation path design, it is recommended that enterprises adopt a step-by-step three-stage development strategy. The first phase lasts 6-12 months and focuses on market research and preliminary preparations. Enterprises need to form a professional overseas expansion team, conduct in-depth market research, and scientifically select target areas and industry positioning. On this basis, a detailed project feasibility study report will be completed, and communication with the local government and related approval procedures will be initiated. The quality of work at this stage will directly affect the smooth progress of subsequent projects.

The second phase takes about 12-18 months and mainly focuses on project implementation and construction. The company needs to complete infrastructure investment such as land acquisition and factory construction, and at the same time start to form a local management team. At this stage, special attention should be paid to the establishment of the supplier system, and through systematic certification and cultivation processes to ensure that core suppliers can meet production needs. Equipment procurement, installation and commissioning also need to be completed at this stage to fully prepare for subsequent formal production.

The third phase lasts 18-24 months and focuses on operational optimization and scale expansion. Enterprises need to achieve steady increase in production capacity and continuous improvement in yield rate through refined management. Establish a quality management system that complies with international standards to ensure that product quality meets customer requirements. At the same time, we actively develop local market channels and establish a stable customer base. After the operating system matures, opportunities for capacity expansion can be evaluated in a timely manner to achieve rolling development.

In terms of risk management and control system construction, enterprises need to build multi-level protection mechanisms. In terms of policy risk prevention and control, it is necessary to establish a dynamic monitoring mechanism, continue to track changes in industrial policies, maintain good communication with local governments, actively strive for support from preferential investment policies, and formulate complete emergency plans. Operational risk prevention and control requires work from multiple dimensions such as talent, supply chain, and intellectual property. Operational safety is ensured through systematic local talent training, strict supplier management, comprehensive intellectual property protection strategies, and sophisticated cost control systems. . Market risk prevention and control requires the adoption of more flexible business strategies, including establishing a flexible pricing mechanism, developing a diversified customer structure, launching a differentiated product portfolio, and implementing prudent inventory management policies.

To ensure the effective implementation of strategies, companies should establish a dedicated overseas business management committee to regularly evaluate project progress and adjust strategies in a timely manner. At the same time, make full use of the support of professional institutions, including accounting firms, law firms, and management consulting companies, to reduce operational risks. Establish a scientific assessment and incentive mechanism, organically combine overseas business development goals with management team performance assessment, and stimulate team enthusiasm.

Overseas market development is a systematic project that requires strategic determination and usually requires a cultivation period of 3-5 years to achieve breakeven. It is recommended that enterprises set up special overseas market development funds to ensure the continuity and stability of investment. Through systematic planning and solid execution, companies will be able to seize opportunities in the industrial transformation in the Asia-Pacific region and achieve long-term sustainable development. In this process, maintaining strategic patience and adhering to long-termism will be the key factors for the company’s success.

Case analysis

Through an in-depth analysis of typical cases of industrial layout adjustment in the Asia-Pacific region in recent years, this chapter will provide valuable practical reference and experience enlightenment for enterprises from two dimensions: success and failure.

In terms of successful cases, South Korea’s Samsung Electronics’ Vietnam layout can be regarded as a model of industrial chain reconstruction. Since its first investment in northern Vietnam in 2008, Samsung has invested more than US$20 billion in total to build a complete industrial system including mobile phones, displays, and home appliances. In 2023, Vietnam has become Samsung’s largest production base in the world, with an annual output of 150 million mobile phones and an export volume of US$65 billion, driving more than 300 Korean suppliers to invest locally. Samsung’s success is due to its systematic layout strategy: first, it chooses northern Vietnam as its base, which has a complete deep-water port, high-quality industrial workers, and relatively low land costs; second, it adopts a progressive investment strategy and first builds mobile phones. The factory verifies the feasibility and gradually expands the scale of investment after success; the third highest We attach great importance to the localization of the supply chain and support the growth of local enterprises through the “Samsung Supplier Development Plan”, increasing the local procurement rate from the initial 10% to the current 57%; fourthly, we focus on talent training, investing in the establishment of vocational training centers, and training every year There are 5,000 skilled workers, establishing a stable talent supply system.

Another successful case is Japan’s Toyota Motor’s industrial layout in India. Toyota entered the Indian market in 2000. After more than 20 years of development, its annual production capacity has reached 310,000 vehicles, and its market share has steadily increased. Its successful experience is mainly reflected in: deeply localized product development strategy, developing special models based on Indian consumer preferences; establishing a complete parts and components supporting system, driving more than 60 Japanese suppliers to invest in India, forming an industrial cluster; innovative marketing service model, establishing a community of interests with local dealers to ensure channel stability; actively fulfilling social responsibilities, helping local youth find employment through technical training projects, and gaining support from the government and the public.

From these successful cases, we can summarize several key success factors: The first is a scientific site selection strategy that fully considers comprehensive factors such as infrastructure, human resources, and supporting industries; the second is a reasonable investment pace, based on market response. Gradually expand the scale of investment; the third is to attach great importance to supply chain construction and reduce operating costs by cultivating local suppliers; the fourth is to focus on integration with local society and give back to the society through talent training and other methods.

In terms of failure cases, the lessons learned from an American retail giant’s investment in India are particularly profound. The company entered the Indian market in 2007 and plans to invest US$1.5 billion to build a retail chain network. However, by 2023, it was forced to exit after accumulating losses of more than US$1 billion. The main reasons for failure include: insufficient understanding of the characteristics of the Indian retail market and simply copying European and American business models; ignoring the advantages of local competitors and underestimating the influence of traditional retail channels; improper supply chain management and failure to effectively integrate local supplier resources; failure to fully consider Regulatory policy risks, and lack of response plans when foreign investment access policies are tightened.

Another cautionary case is the investment of a German industrial company in Malaysia. The company invested in building an automation equipment factory in Malaysia in 2015. However, due to overly optimistic estimates of the local labor market, the company faced a serious shortage of skilled workers after the project was put into production. At the same time, because the certification requirements of the ASEAN market were not fully considered, product market access was blocked, which ultimately led to the factory operating rate being less than 50% for a long time, causing huge losses.

From these failure cases, we can summarize the following risk prevention suggestions: First, in-depth market research must be conducted before investment to fully understand the characteristics and needs of the target market; second, a complete risk assessment system must be established, paying special attention to policy risks, Labor risks and market risks; third, formulate flexible market strategies and maintain the ability to respond quickly to market changes; fourth, attach importance to localized operations, respect local market characteristics, and appropriately adjust the business model.

Specific suggestions for preventive measures include: establishing a professional overseas investment evaluation team, whose members should include experts in various fields such as market, technology, law, etc.; establishing a project milestone assessment mechanism to promptly evaluate the feasibility of the project before the investment reaches a certain scale; establishing a complete retreat Mechanism, formulate a clear exit plan at the early stage of investment; strengthen communication with local governments and industry associations, and establish an information early warning mechanism.

Generally speaking, overseas investment is full of opportunities and challenges. Enterprises need to develop scientific investment strategies and risk prevention measures based on fully learning from existing experiences and lessons and combining their own characteristics. The key to success lies in maintaining strategic focus, adopting a step-by-step development strategy, paying attention to localized operations, and establishing a complete risk management and control system. Through systematic planning and solid execution, companies can achieve sustainable development in the Asia-Pacific market.

Supporting policies and resources

In terms of government support policies, major countries in the Asia-Pacific will generally increase their support for foreign investment in 2024. The “Made in India 2.0” plan launched by the Indian government provides more favorable industrial support policies, providing subsidy support of up to 30% of the project investment to foreign-invested enterprises in key industries such as electronic manufacturing and new energy vehicles. Among them, manufacturing projects invested in Uttarakhand and Madhya Pradesh can receive a 40% subsidy on land purchase costs. The “Investment Law” revised by the Vietnamese government in early 2024 has further relaxed restrictions on foreign investment access. Key industrial projects in the Hanoi-Haiphong Economic Corridor can enjoy a 15-year corporate income tax preferential period, with tax rates as low as 10%. The “Future Economic Transformation Plan” launched by Singapore provides comprehensive policy support for high-tech manufacturing, including R&D subsidies of up to SGD 5 million and tax exemptions for up to 10 years.

In terms of fiscal and taxation support, governments around the world have introduced targeted measures. The “Digital Transformation Acceleration Program” launched by the Malaysian Digital Investment Office provides foreign-invested enterprises with up to 3 million ringgit in digital transformation subsidies. Indonesia’s new tax preferential policy implemented in 2024 provides income tax reductions and exemptions for up to 13 years for projects investing more than IDR 100 billion in priority industries. The new round of preferential measures launched by Thailand’s Board of Investment (BOI) provides import tariff exemptions on machinery and equipment up to 50% of the investment amount for high-tech projects invested in the Eastern Economic Corridor (EEC).

The financial support system has also been significantly optimized in 2024. In terms of financing channels, the Asian Development Bank (ADB) has established a US$10 billion special industrial upgrading fund to provide preferential loans for cross-border industrial transfer projects, with interest rates 1-2 percentage points lower than market interest rates. The Export-Import Bank of China has launched a special loan program for “going global” enterprises, which can provide financing support for up to 70% of the total project investment, with a loan term of up to 15 years. In terms of exchange rate risk management, major commercial banks have launched more flexible foreign exchange hedging tools, such as the “Asian Currency Connect” business launched by DBS Bank, which provides a package management plan for ASEAN currencies, which can effectively reduce the risk of exchange rate fluctuations.

In the field of insurance services, China Export and Credit Insurance Corporation will expand the coverage of overseas investment insurance in 2024, adding innovative insurance types such as supply chain interruption insurance and intellectual property protection insurance. The “One Belt, One Road” comprehensive insurance plan launched by American International Group (AIG) provides enterprises with comprehensive protection including political risks, property security, operational interruptions, etc., with an insurance limit of up to US$500 million.

In terms of professional service resources, international consulting agencies such as Wanqibang will strengthen their service capabilities for the Asia-Pacific market in 2024 and set up multiple Asia-Pacific investment consulting centers to provide one-stop services, including investment feasibility studies and financial due diligence . , tax planning, etc., which can save enterprises 20-30% of preliminary research costs. Wanqibang ‘s digital investment decision-making platform integrates industrial data, policy information and risk assessment models from Asia-Pacific countries to help companies quickly conduct investment decision-making analysis.

In order to facilitate enterprises to efficiently connect various resources, it is recommended to take the following steps: First, establish initial contact through the economic and commercial offices of the host country’s embassy and consulates abroad to obtain basic information and policy guidance; second, connect with the investment promotion agencies of the target country to understand specific Preferential policies and application procedures; third, choose a strong professional service organization as a long-term partner and establish a stable service relationship; fourth, actively participate in various chambers of commerce and gain valuable practical experience through peer exchanges.

It is worth noting that policy support and supporting resources are often time-sensitive. It is recommended that enterprises establish a special policy tracking mechanism and regularly update relevant information. At the same time, when applying for various support policies, you should pay attention to preparing sufficient application materials, comply with relevant procedural requirements, and improve the application success rate. By effectively utilizing various support policies and supporting resources, companies can significantly reduce overseas investment risks and improve investment efficiency.