New Report From Atradius Outlines Supply Chain Risks in Asia

Atradius, a trade credit insurer based in Amsterdam, recently released a detailed report focused on the performance of 11 key Asian economies, including China, India, Indonesia, Japan, Malaysia, The Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

For each country, the report provides key economic indicators, the outlook for major industries and an analysis of the political and economic situation.

Some of the main takeaways from the Atradius Report include:

• Robust domestic demand in India is resulting in record high annual economic growth rates of 7 percent through 2020, but the country's structural deficiencies may threaten this outlook.
• Singapore and South Korea show the lowest amount of risk in the Asia-Pacific region, both are susceptible to risks stemming from an escalation of the Sino-U.S. trade dispute.
• Regarding Japan, analysts say there is an urgent need to make the labor market more flexible, to end protections for farmers, doctors and pharmaceutical companies and to introduce more business deregulation.

Chris Chen, Head of Risk – China Risk Services, told SCMR in an interview that given the uncertainty of trade war, more and more firms are holding further investment into China and considering relocate production lines to other countries.

“This is especially true for ICT manufacturers who are moving factories to Southeast Asia like Vietnam and Malaysia,” she said “Thailand and Indonesia are also taken into consideration. Cost of labor and manpower are main considerations.”

Chen added that textile companies are shifting their supply chain outside China to Southeast Asia to Vietnam and Bangladesh.

“Bangladesh is experiencing a renaissance,” said Chen.. “Generally for enterprises, additional tariffs are not the only concern. There is increased pressure from the rising cost of the labor force.”

Asia Countries - Atradius STAR Political Risk Rating*:

• China: 3 (Moderate-Low Risk) – Stable
• India: 4 (Moderate-Low Risk) – Negative
• Indonesia: 4 (Moderate-Low Risk) – Negative
• Japan: 3 (Moderate-Low Risk) – Positive
• Malaysia: 3 (Moderate-Low Risk) – Negative
• Philippines: 4 (Moderate-Low Risk) – Stable
• Singapore: 1 (Low Risk) – Stable
• South Korea: 2 (Low Risk) – Negative
• Taiwan: 2 (Low Risk) – Negative
• Thailand: 4 (Moderate-Low Risk) – Stable
• Vietnam: 5 (Moderate Risk) – Negative

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