Efforts to Become Alternatives to China for Production and Investment Bases
"Seizing Opportunities in Supply Chain Restructuring and Industrial Advancement"
As the second term of the Donald Trump administration approaches, an analysis has emerged that Southeast Asia, India, Japan, and other major Asian countries are accelerating their responses to supply chain restructuring, such as Vietnam attracting the establishment of Nvidia's artificial intelligence (AI) research and development (R&D) center. Amid growing concerns over high tariff policies and regulations on China's indirect exports, which were campaign promises of Trump, neighboring countries are focusing on solidifying their positions as alternatives to China's production and investment bases. Korean companies are advised to strengthen localization strategies and thoroughly manage risks to take advantage of supply chain restructuring and industrial advancement opportunities in Southeast Asia, India, and Japan.
KOTRA, together with the Ministry of Trade, Industry and Energy, released a report titled "Trends and Implications of Major Asian Countries in Light of the New U.S. Administration" on the 15th, analyzing the industrial status and opportunities for Korean companies in Vietnam, Malaysia, Indonesia, Thailand, India, and Japan.
According to the report, the six Asian countries are closely monitoring whether the Trump second-term government will impose universal tariffs, as their export dependence on the U.S. is high. The U.S. is the largest export market for Vietnam, Thailand, India, and Japan. Additionally, the four Southeast Asian countries and India are concerned about potential spillover effects as Chinese corporate investments increase. The U.S. aims to strengthen regulations on China's third-country indirect exports.
Each country is responding to the launch of the Trump second-term government through attracting advanced industrial facility investments, development cooperation, energy and digital transitions, and industrial diplomacy. Vietnam is preparing to leap forward in advanced industries by establishing Nvidia's AI R&D center and cooperating with SpaceX on satellite communication development. Malaysia is strengthening its position as a semiconductor supply chain hub. Tariff benefits for companies using local parts have expanded, improving entry conditions.
Indonesia is actively promoting foreign investment attraction in the clean energy sector. Thailand aims to become a regional hub for the digital economy by accelerating the adoption of advanced technologies such as cloud computing and AI.
India views the launch of the Trump second-term government as an "opportunity" despite the possibility of universal tariffs. It is especially expected to increase its role as the new global manufacturing hub following China. Japan is concerned that the Trump second-term government will negatively impact the automotive industry and is seeking early summit meetings and diplomatic solutions. Major companies like Toyota are strengthening their monitoring.
KOTRA advised Korean companies that opportunities may open in Vietnam's advanced industrial technology cooperation demand, renewable energy cooperation with Indonesia, and the expansion of Thailand's digital transformation (DX) market. KOTRA stated, "In the short term, our companies need to manage risks, strengthen localization, and enhance supply chain flexibility," adding, "In the mid to long term, differentiated strategy formulation, entry into regional value chains, and strengthening cooperation in innovation ecosystems are required."
Lee Ji-hyung, head of KOTRA's Economic and Trade Cooperation Division, said, "Changes in the Asian market due to the launch of the new U.S. administration require new entry strategies for our companies," and added, "KOTRA will spare no effort in providing comprehensive support so that companies can enhance competitiveness through strengthening local technological cooperation, expanding participation in value chains, and proactively entering new growth sectors."
The report is available for free on KOTRA Overseas Market News.
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