Why the 'China plus one' supply chain shift is paying off less than Southeast Asia hoped
The 'China plus one' supply chain strategy has brought investment to Southeast Asia, but the region is struggling to capture high-value manufacturing processes. Experts argue that the traditional 'flying geese' model of industrial development is failing as China retains core supply chain components.
Why it matters
This shift impacts global manufacturing stability and the economic development trajectories of emerging markets in Southeast Asia.
“China plus one” has been a winning strategy for Southeast Asia. The proposition was simple: Draw in global manufacturers pivoting away from China owing to rising costs and geopolitical tensions, and win stronger growth, higher wages, and more jobs for local economies.
Yet despite winning billions of dollars of investment in new factories, the region is reaping fewer benefits than its leaders may have hoped.
“China plus one has been a net gain for Southeast Asia, but a conditional and uneven one,” says Meng-Chun Liu, the director of the Chung-Hua Institution for Economic Research (CIER), a Taiwan-based think tank. “It brought factories, exports, and jobs to the region, but not the design, core components, and process know-how that captures most of the value.”
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