Supply Chain Diversification Poised to Enable APAC Growth

In the face of growing trade complexities, a third (33%) of businesses in the Asia-Pacific (APAC) region are developing parallel supply chains to counter geopolitical disruptions, while 29% are creating dual supply chains tailored to the US and Chinese markets.
That's according to research from Economist Impact and DP World, which highlights how firms in the region are embracing supply chain diversification and digital innovation to safeguard resilience amid increasing trade tensions – particularly between China and the US.
Insights stem from the fifth annual Trade in Transition study, which surveyed more than 3,500 supply chain executives globally. Launched the ongoing World Economic Forum gathering in Davos, the report reveals how companies are rapidly adapting to rising protectionism and evolving geopolitical dynamics, with a focus on maintaining business continuity and managing costs effectively.
Diversification and regional integration lead APAC strategies
To navigate escalating geopolitical risks, many APAC businesses are adopting strategies such as 'China Plus One', an approach encouraging companies to reduce dependency on China by establishing production hubs in alternative markets like Thailand and Vietnam.
Parallel supply chains and dual systems aimed at mitigating risks and managing costs have also gained traction across the region.
This push for diversification aligns with broader trends in regional integration. Governments in APAC have incentivised supply chain regionalisation through trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), helping firms reduce operational costs, improve efficiency and boost support for local economies.
According to the research, 38% of business leaders in APAC have reported increased opportunities due to such agreements, while 30% have benefited from reduced tariffs on exports. Additionally, almost a quarter (23%) have strengthened sourcing within the region, reducing reliance on external markets and reinforcing local supply chains.
Technology to address labour shortages
Elsewhere, emerging technologies like automation and AI are playing a critical role in sustaining productivity across APAC’s supply chains. Businesses are turning to these technologies to mitigate workforce shortages and enhance operational efficiency.
This trend is yielding tangible results, with 36% of APAC firms reporting substantial reductions in trade operation costs. Meanwhile, 28% are observing improved resource planning and enhanced supply chain efficiency.
Governments in the region are also supporting technological adoption through initiatives like Japan’s Society 5.0, which promotes digital innovation to drive economic transformation.
Glen Hilton, CEO and Managing Director, Asia-Pacific at DP World, comments: “The Asia-Pacific region is in an era of significant transformation. As businesses in the region implement bold strategies – diversifying supply chains, capitalising on regional trade deals and adopting frontier technologies – to drive expansion, they must also balance ambition with caution to sustain momentum in the face of global geopolitical instability.
"Our customers can count on DP World to help them strike this balance. With our suite of end-to-end supply chain solutions anchored by our strong network of ports and terminals, we stand ready to help businesses design agile supply chains for them to tap on Asia-Pacific’s unparalleled growth potential.”
Balancing risks and innovation
Economist Impact and DP World's findings indicate that firms are not retreating from international trade despite geopolitical headwinds. Instead, they are stepping up to the challenges of a reshaped global landscape.
Businesses that stay agile and combine effective risk management with AI experimentation and openness to innovation are positioned to thrive.
John Ferguson, Global Lead for New Globalisation at Economist Impact, notes: “In 2025 and the foreseeable future, global trade will be shaped by three forces: shifting geopolitics, climate change and a new wave of AI and automation. Yet, businesses are not retreating from international trade but are stepping up to the challenge. Firms that stay agile and cost-efficient will have the edge.
"Firms that combine risk management with AI experimentation and openness will be best placed to win in this new chapter of globalisation.”
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