In 2030, Asia Pacific is expected to account for over 40% of global economic output, 54% of the global population and a staggering 65% of the global middle class. Consequently, intraregional trade within Asia Pacific will rise in importance and supply chain teams will be called on to make critical decisions on the location of facilities in close proximity to growing demand markets in Asia.
Given the prevailing fundamental drivers, the manufacture of technology-based products in Asia will grow. Asia will also continue to be a key source of finished goods for global markets. Accordingly, the manufacture of components and sub-assemblies will increase in markets like Vietnam, Indonesia and India. These markets will also move up the value chain and begin producing more finished goods as China capacity is taken up with servicing domestic demand.
The manufacture of finished goods will also increase for labour intensive industries such as textiles, apparel, shoes and furniture, from which Vietnam, Malaysia, India and Indonesia all stand to gain. In addition, bulky goods such as rubber, plastics, glass, chemicals, cement will be traded within the region given the cost of these materials, reflected in the fact that 56% of the trade for these types of materials is intraregional4. Food and beverages are also in this intraregional category given their perishable nature and the need for cold chain integrity and traceability, with Indonesia, Vietnam, Philippines and Malaysia being key markets in the region.
4 McKinsey Global Institute (2019) “Globalisation in transition: The future of trade and value chains”