By Richie Lin 

By the introduction of the articles of “The Economists”, Alternative Asian Supply Chain (ALTASIA) attracts eyeballs of the people who care about the ongoing tensions between USA and China. The alternative Asian supply chain is a result of the widening geopolitical confrontation between USA and China. This is forcing global manufacturers to look elsewhere in Asia for new production sites. However, no single country in the region comes close to replicating China’s importance as an export hub. But a crescent of 14 countries are together beginning to provide competition.  This fourteen countries include Japan, South Korea, Taiwan, the Philippines, Indonesia, Singapore, Malaysia, Thailand, Vietnam, Cambodia and Bangladesh, all the way to Gujarat, in north-western India. Its members have diversified strengths, from Japan’s high skills and deep pockets to India’s low wages. On paper, this is an opportunity for a useful division of labor, with some countries making sophisticated components and others assembling them into finished products. In the past 40 years, the developed countries led by USA outsourced the manufacturing of their products to Asian countries such as Japan, South Korea, China, Taiwan, Vietnam and Thailand. This outsourcing strategy boosted China to become the factory of the world combined with the unparalleled power driven by governmental initiatives, substantial labor forces, and foreign investments and technology. It created a most complete supply chain in one single country in the history. No matter what kind of products you want to buy, you can always find a full-fledged supply chain in China, especially in Guangdong, Jiangsu and Shanghai. People in developed world such as USA and European countries are all depending on China to provide their daily products such as clothes, shoes, houseware, furniture, and mechanical products. However, the Sino-American trade war walked hand in hand with port congestions and space shortage to create supply chain break-down from 2020 till the second quarter of 2022. Additionally, labor costs in China have surged with the country’s increasing prosperity, and are now far higher than those in parts of South and South-East Asia (though workers in Altasia’s wealthiest countries, such as Singapore and Japan, earn far more). Factory labor costs were $8.31 per hour in China last year, compared with less than $3 in places such as India, Thailand and Vietnam.

If you are importers and whole-sellers in USA, you will feel more and more stress of managing so wide-spreading supply chain. In the past, you can rely on one single country -China to fulfill all your requirements. But the geopolitical tensions and economic incentives force you to choose multiple countries to do the jobs of China can do alone in the past. This phenomenon makes suppliers and buyers all face the challenge of multiple points of origin and multiple points of consumption. For example, the transit time and the routes from the ports in India to USA are totally different from those in China. So if buyers purchase products from these countries at the same time, they would need to send purchase orders at different time to make sure the products can arrive to shelves of the stores at their designated time. They need an all-around logistics provider to provide logistics from multiple countries to multiple countries including pick up, customs clearance, freight forwarding, warehouse management and last mile door delivery. This logistics company must have full-fledged data, knowledge, experiences and networks to provide such a complicated cargo movement. Furthermore, a total logistics provider must also have well-designed IT system to provide 24 hours online tacking to track each purchase order transparently, and VMI to provide real time products in/out and inventory in different warehouses. Alternative Asian Supply Chain force customers to take care of suppliers in so many different countries that they need total logistics providers to optimize the flow of goods from the multiple points of origin to the multiple points of consumption.

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