EMEA in focus as mega trends shift global supply chain dynamics

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Globalisation and cross-border trade have been the norm and key driver of the global economy for decades; but a new dawn is rising with protectionist trade policies, trade wars, and the Covid-19 pandemic severely disrupting supply chains and forcing companies to examine new models and strategies in a bid to mitigate risk. The reversing of globalisation is the new reality where regionalisation will be increasingly important.

There is an acute need for companies to be more resilient to external shocks and to be able to handle global disruptions. To diversify current globalised supply chains, strategies incorporating reshoring, nearshoring, and offshoring are creating opportunities to build more regionalised supply chains and reduce dependence on a complex global web. This shift is causing a vast ripple effect around the world with nearly 85 million manufacturing jobs set to be affected globally. To support Swedish companies with their strategies, Business Sweden has undertaken extensive research in EMEA to identify the emerging hotspots for global supply chain nearshoring. The findings of this research underpin this article.

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THE REALITY IS NOT ALWAYS SIMPLE
While change is already progressing, the reality of a complete shift in supply chain dynamics will not be simple. Offshoring will remain strong because of the interdependencies with Asia, particularly China, the region’s integrated chains, and the cost of withdrawing. A company looking to withdraw just one percent from China and nearshore this to an experienced country like Poland would require an increase of production in Poland by 25 percent. Assessing current offshore set ups need to consider the depth and specialisation of the supply chains and sheer volume of manufacturing in China to enable a smooth transition. Many countries are pursuing a China +1 model, where they diversify to another country within APAC to reduce full dependence on China within the Asian markets.

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