Reuters, Hong Kong :
Fred Perrotta spent four years building a network of Chinese suppliers for his line of trendy backpacks, but as soon as the United States announced tariffs on almost half of its Chinese imports, he started looking for suppliers in other countries.
That process is now so far advanced it would be too late to reverse it even if US President Donald Trump and his Chinese counterpart Xi Jinping call a truce in their growing trade war at this week’s G20 summit, the 33-year-old said.
Perrotta’s company, Tortuga, is joining what industry experts say is the biggest shift in cross-border supply chains since China joined the World Trade Organisation in 2001.
The shift is creating stiff competition to secure new facilities in neighbouring countries and rebuild supply chains outside of China, home to a fifth of global manufacturing.
“Everyone is nervous and scrambling around,” Perrotta said by phone from Oakland, California, where he recently took delivery of the first samples from a potential new supplier in Vietnam.
“Long-term, we will probably shift everything.”
The scramble is driven by the risk of more, and higher, US tariffs on China, and fears that nearby emerging economies can only accommodate new businesses on a “first come, first served” basis.
Vietnam and Thailand are emerging as preferred destinations, but they still face capacity constraints ranging from red-tape to skilled labour and limited infrastructure.
Reuters interviews with more than a dozen company executives, trade lawyers and lobby groups in various industries revealed a frenzy of activity across Asia in recent months: executives are requesting product samples, touring industrial parks, hiring lawyers and meeting with officials.
In June, Hong Kong-listed furniture maker Man Wah Holdings bought a factory in Vietnam for $68 million and said earlier this month it plans to almost triple its capacity to 373,000 square meters by the end of 2019.
“The acquisition is to mitigate the risks posed by tariffs,” Man Wah said in a statement.
Vietnam-based industrial real estate developer BW Industrial says inquiries have surged since October, and all its factories are now leased out.
“The manufacturers are from all over the world but they all have production plants in China and need to start production ASAP,” Chris Truong, a sales manager at BW Industrial told Reuters.
In Thailand, SVI Pcl, which provides electronics and manufacturing solutions, said it has just selected four new deals worth about $100 million with existing customers who have operations in China.
“The trade war is good for us,” CEO Pongsak Lothongkam said. “We have been approached by so many companies that we have to prioritise.”
KCE Electronics, Southeast Asia’s biggest maker of printed circuit boards (PCBs), has been contacted by US companies who want to seek a new supplier to replace one in China, CEO Pitharn Ongkosit told Reuters.
“It’s a good opportunity. Many customers have contacted us to ask about our products and prices. But there are no sales yet as it will take time,” he said.
Stars Microelectronics Pcl, another Thai electronics manufacturing services provider, is also getting new business.
Fred Perrotta spent four years building a network of Chinese suppliers for his line of trendy backpacks, but as soon as the United States announced tariffs on almost half of its Chinese imports, he started looking for suppliers in other countries.
That process is now so far advanced it would be too late to reverse it even if US President Donald Trump and his Chinese counterpart Xi Jinping call a truce in their growing trade war at this week’s G20 summit, the 33-year-old said.
Perrotta’s company, Tortuga, is joining what industry experts say is the biggest shift in cross-border supply chains since China joined the World Trade Organisation in 2001.
The shift is creating stiff competition to secure new facilities in neighbouring countries and rebuild supply chains outside of China, home to a fifth of global manufacturing.
“Everyone is nervous and scrambling around,” Perrotta said by phone from Oakland, California, where he recently took delivery of the first samples from a potential new supplier in Vietnam.
“Long-term, we will probably shift everything.”
The scramble is driven by the risk of more, and higher, US tariffs on China, and fears that nearby emerging economies can only accommodate new businesses on a “first come, first served” basis.
Vietnam and Thailand are emerging as preferred destinations, but they still face capacity constraints ranging from red-tape to skilled labour and limited infrastructure.
Reuters interviews with more than a dozen company executives, trade lawyers and lobby groups in various industries revealed a frenzy of activity across Asia in recent months: executives are requesting product samples, touring industrial parks, hiring lawyers and meeting with officials.
In June, Hong Kong-listed furniture maker Man Wah Holdings bought a factory in Vietnam for $68 million and said earlier this month it plans to almost triple its capacity to 373,000 square meters by the end of 2019.
“The acquisition is to mitigate the risks posed by tariffs,” Man Wah said in a statement.
Vietnam-based industrial real estate developer BW Industrial says inquiries have surged since October, and all its factories are now leased out.
“The manufacturers are from all over the world but they all have production plants in China and need to start production ASAP,” Chris Truong, a sales manager at BW Industrial told Reuters.
In Thailand, SVI Pcl, which provides electronics and manufacturing solutions, said it has just selected four new deals worth about $100 million with existing customers who have operations in China.
“The trade war is good for us,” CEO Pongsak Lothongkam said. “We have been approached by so many companies that we have to prioritise.”
KCE Electronics, Southeast Asia’s biggest maker of printed circuit boards (PCBs), has been contacted by US companies who want to seek a new supplier to replace one in China, CEO Pitharn Ongkosit told Reuters.
“It’s a good opportunity. Many customers have contacted us to ask about our products and prices. But there are no sales yet as it will take time,” he said.
Stars Microelectronics Pcl, another Thai electronics manufacturing services provider, is also getting new business.
