Over the past decade, accelerated by the pandemic and rising geopolitical tensions, global trade has entered a structural reset. Global trade in goods now exceeds $25 trillion annually, yet its structure is shifting.
Supply chains once optimised purely for cost are being redesigned for resilience, redundancy and geopolitical risk management. As a result, the geography of manufacturing is being redrawn and Southeast Asia is emerging as one of the most strategic regions in this transformation.
Multinational corporations are rebalancing production footprints, governments are deploying industrial subsidies worth hundreds of billions of dollars globally, and investors are reallocating capital towards new production and logistics hubs.
‘CHINA+1’ AND BEYOND
For nearly three decades, China served as the backbone of global manufacturing, accounting for 28–30% of global manufacturing output. However, rising labour costs, pandemic disruptions, export controls and tariffs introduced during US-China trade tensions have accelerated diversification. The “China+1” strategy has evolved into “China+N”, with companies building multi-country production networks across Asia to reduce single-country risk.
Asean economies are absorbing a growing share of redirected capital. The region now attracts over $220 billion in annual foreign direct investment (FDI), with manufacturing a key component. Countries such as Vietnam, Thailand and Malaysia are seeing strong inflows into electronics, automotive components, advanced manufacturing and semiconductors.
Meanwhile, China remains central to upstream supply chains, creating a more layered and distributed ecosystem rather than a full relocation.
A critical driver behind this shift is the tariff framework imposed by the United States Trade Representative under Section 301 trade actions and subsequent policy measures. Tariffs on a wide range of Chinese-manufactured goods, from electronic components to industrial equipment, have materially changed the economics of global sourcing.
For multinational manufacturers exporting to the United States, producing within China increasingly carries both cost and policy risk. As a result, companies are relocating portions of their supply chains to Southeast Asia where exports can avoid certain tariff exposures while maintaining proximity to Asian supplier ecosystems.
This is one reason why export-oriented factories in Vietnam, Thailand and Malaysia have seen significant growth in sectors tied to US-bound supply chains such as consumer electronics, appliances and electrical components.
Tariffs, in this context, function less as a temporary trade impediment and more as a structural incentive reshaping manufacturing footprints.
NEARSHORING BENEFITS
While Southeast Asia is benefiting from diversification away from China, another major shift is occurring closer to the United States: nearshoring to Latin America.
Countries such as Mexico, Brazil and Costa Rica are attracting manufacturing investment as companies seek shorter supply chains, reduced shipping times and lower geopolitical risk for goods destined primarily for North American markets. Trade frameworks such as the US–Mexico–Canada Agreement reinforce this trend.
However, nearshoring does not replace Asia, it complements it. Global companies are increasingly designing dual supply chain strategies:
- Latin America serving the US market through proximity manu- facturing,
- Southeast Asia serving global demand, including Europe, Asia and diversified export channels.
This dual-hub model actually strengthens the strategic role of Southeast Asia. As companies distribute production across regions, they require scalable manufacturing ecosystems capable of supporting complex electronics, automotive systems and industrial supply chains, areas where Asean is rapidly strengthening capabilities. For Thailand, the rise of nearshoring in Latin America does not diminish opportunity, it clarifies strategy.
ELECTRONICS CORRIDOR
Southeast Asia is forming an electronics manufacturing corridor. Vietnam has become a major consumer electronics assembly hub. Malaysia plays a critical role in semiconductor packaging and testing, part of a global semiconductor market exceeding $500 billion annually. Thailand, long strong in automotive production (over 2 million vehicles annually pre-pandemic), is expanding into electronics and advanced industrial manufacturing.
This realignment is about specialisation, not simple relocation. Each country occupies distinct positions within an integrated regional production network spanning components, assembly and logistics.
For companies, this reduces systemic risk. For Southeast Asia, it represents one of the largest industrial opportunities in decades.
The Regional Comprehensive Economic Partnership (RCEP) further accelerates this shift. Covering 15 countries and roughly 30% of global GDP and population, it is the largest trade agreement in history.
By lowering tariffs and harmonising rules of origin, the RCEP enables companies to distribute production across Asia while retaining trade benefits, encouraging regional supply chain design rather than single-country concentration.
As production decentralises, logistics becomes decisive. Southeast Asian governments are investing billions into ports, rail corridors and industrial zones. Asean merchandise trade already exceeds $3 trillion annually, underscoring the scale of goods moving through the region.
THAILAND’S POSITION
For Thailand, the opportunity lies in moving up the value chain. As lower-complexity production nearshores to the Americas, Thailand can focus on higher-value manufacturing. With the right incentives and infrastructure alignment, Thailand can attract a meaningful share of diversified manufacturing capital.
Supply chains are no longer linear; they are multi-regional networks. Investors who position early in Thai infrastructure, industrial platforms and advanced manufacturing ecosystems may benefit from one of the most significant rewirings of global trade in modern history.
To remain competitive in the new supply chain order, Thailand can focus on several structural advantages:
1. Become the advanced manufacturing hub of Asean: As nearshoring absorbs lower-complexity production for North America, Thailand can capture higher-value manufacturing in areas of electronic components, EV supply chains, automation systems and semiconductor-related production.
2. Strengthen regional supply chain integration: Thailand is well-positioned to act as a coordination hub linking Asean manufacturing networks to global markets through logistics, industrial services and digital supply chain platforms.
3. Expand infrastructure and smart logistics: Investments in ports, rail corridors and industrial zones will allow Thailand to handle growing trade flows as companies operate multi-region supply chains.
4. Attract strategic industries relocating from China: Tariffs, geopolitics and diversification are pushing companies to seek stable manufacturing bases in Asia; Thailand can capture a significant share with the right policies and incentives.
For Thai investors, supply chains are shifting from linear models to multi-regional networks, with Latin America, Southeast Asia and India playing distinct roles. Investors who position early in infrastructure, industrial platforms and advanced manufacturing in Thailand could benefit from one of the largest rewirings of global trade in decades.
Rewin Pataibunlue is a Founding Partner and Group CEO at PrimeStreet Group, an investment banking, strategic management consulting and alternative fund management firm based in Bangkok.
credit:The new supply chain order
