Asian Firms Adopt Multi-Shoring for Supply Chain Diversification

Diversifying Production Across Markets

Companies are increasingly distributing their manufacturing and sourcing across multiple geographic markets, a strategy known as multi-shoring. This approach aims to reduce concentration risk and enhance the flexibility of global supply chains. Geopolitical uncertainty, trade disruptions, and shifting demand patterns are driving this reassessment of production geography.

Analysis from the Organisation for Economic Co-operation and Development (OECD) shows that high import concentration can create supply chain vulnerabilities, emphasising the need for agility and adaptability. Multi-shoring directly addresses this by establishing alternative production locations within a company's network.

Evolving Beyond China Plus One

This diversification trend extends beyond the earlier “China Plus One” strategy, which gained prominence among Japanese companies in the early 2000s and during the COVID-19 pandemic.

China Plus One typically involved maintaining a production base in China while adding capacity in another country, often a developing Asian economy like Vietnam, as described by the Asian Development Bank (ADB) and noted by World Bank analysis on value chain relocation.

Today, Asian production networks are evolving into more diversified, multi-hub structures, reflecting heightened awareness of geopolitical tensions and trade measures.

Managing Complex Global Networks

Industries characterised by high production volumes, rapid demand changes, or concentrated manufacturing, such as electronics, electric mobility, batteries, automotive, and information and communication technology (ICT), are adopting multi-shoring. This strategy, while boosting resilience, also introduces significant coordination demands.

Companies must manage diverse suppliers, logistics infrastructure, customs requirements, and regulations across various locations. UN Trade and Development (UNCTAD) recommends diversifying shipping routes, ports, and transport modes to mitigate reliance on specific chokepoints and ensure continuity during disruptions.

Operational Shifts for Asian Business

Global trading organisations play a key role in coordinating these increasingly distributed production and supply networks. Samsung C&T Trading & Investment Group, for instance, operates across industrial materials, energy, and technology, leveraging its network of over 70 overseas locations to source and supply materials.

As production bases expand across more markets, the task of matching required materials and volumes through efficient sourcing and logistics becomes more central to operations for Asian businesses. The challenge lies in creating sufficient flexibility without incurring excessive costs or complexity in managing a broader geographic footprint.