Client Context
Our client, a multinational manufacturer with a global customer base, faced increasing risks from overreliance on Chinese manufacturing. Rising labor costs, geopolitical tensions, and pandemic-related disruptions had highlighted vulnerabilities in their supply chain.
They sought to:
- Evaluate alternative manufacturing and assembly locations across Asia Pacific.
- Assess market readiness, cost competitiveness, and infrastructure quality.
- Develop a roadmap for diversifying production while maintaining service levels and cost efficiency.
Our Approach
We structured the engagement into four core phases:
Market Screening:
We conducted a comparative analysis of 12 Asia Pacific markets, assessing political stability, trade agreements, logistics capabilities, labor availability, and cost competitiveness.
Deep-Dive Country Assessments:
Shortlisted markets—including Vietnam, Thailand, Malaysia, and India—were evaluated in detail. This included port and transport infrastructure, supplier ecosystem maturity, regulatory environment, and energy reliability.
Cost-to-Serve Modelling:
We built a total landed cost model incorporating labor rates, tariffs, logistics costs, and tax incentives. This allowed the client to compare production economics under various China+1 relocation scenarios.
Risk and Resilience Mapping:
We assessed exposure to climate risks, supply bottlenecks, and political shifts in each market, identifying mitigation strategies such as multi-country sourcing and nearshoring to secondary hubs.
Impact
Our findings enabled the client to:
- Shortlist Relocation Targets: Vietnam and Thailand emerged as near-term priorities, offering competitive costs and strong logistics links to both Asia and North America.
- Phase Diversification: The client adopted a phased relocation plan, beginning with high-labor, low-complexity products to test supplier readiness.
- Reduce Risk Exposure: By spreading production across three additional Asia Pacific locations, the client reduced reliance on China from 85% to under 60% in three years.
- Unlock Incentives: Government tax breaks and free-trade zone benefits in selected markets lowered landed costs by up to 12%.
By combining market intelligence, cost modelling, and risk analysis, our study gave the client a clear roadmap for supply chain diversification, positioning them to navigate uncertainty and maintain competitive advantage in the Asia Pacific region.
