Reuters Events | Supply Chain & Logistics Business Intelligence

Mark Millar outlines the rules and regulations within Asia in 2014 and how these will affect the Supply Chain and Logistics Industry. Asia is rising, do you agree?

“Asia Rising” is one of the most significant developments that will impact the supply chain, logistics and transport sectors during 2014 – the year for the Horse (马).

Throughout Asia, we will witness an exciting cocktail of new business opportunities, driving massive increases in trade flows, impacting logistics networks and redefining supply chain ecosystems. 

Not least of many stimulus triggers is the ‘Bali Package’ – the global trade agreement agreed by 159 member nations during the final hours of historic WTO talks in December, which in itself is estimated over time to boost the world economy by one trillion US dollars and create more than 20 million jobs, mostly in developing countries - many of them in Asia.

During 2014, three other major multilateral trade agreements are coming into play, all of which will further drive substantial progress in facilitating and empowering growth in international trade for all Asian economies. 

AEC – this year sees final preparations for the ASEAN Economic Community (AEC), which will be the regional economic integration of the ten ASEAN nations - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam - into a single economic community from 2015, harmonising tariff-free flows of goods, services, people and funds across ten jurisdictions comprising over 600 million people.

TPP - the Trans Pacific Partnership will provide Asian economies - Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam – with preferential-tariff multi-lateral access to the huge markets in Canada, Chile, Mexico, Peru and USA.

RCEP – the Regional Comprehensive Economic Partnership joins the ten ASEAN nations together with trading partners Australia, China, India, Japan, Korea and New Zealand, forming a trading block containing almost half the world’s population, with USD 21 trillion GDP and a 27% share of global trade.

The resulting opening up of markets in 2014 will coincide with a massive influx of new and increasingly affluent middle-class consumers throughout Asia, empowered by increasing economic prosperity across the whole spectrum. In the emerging and developing economies in Asia, this new consumer demand is converging with the well-established and very efficient local production bases of substantial proportions of the world’s consumer goods - an eclectic combination that can only spur exponential growth.

The OECD (Organisation for Economic Co-operation and Development) estimate that by 2030, the world’s middle class population will increase to 4.9 billion people, some 3.1 billion more than in 2010. Asia will deliver 85 per cent of this growth – around 2.6 billion new middle class consumers, whose spending will account for almost two-thirds of middle class spending globally.

China is experiencing dramatic shifts in its economy. Multinational companies initially came to China to capitalise on the abundant supply of low-cost labour and various government incentives enticing them to establish operations in Special Economic Zones. They are now just as interested, if not even more so, in the opportunity to sell products to the huge and rapidly expanding Chinese consumer market – “they came for the workers, but stay for the shoppers”,

At the same time, urbanisation is accelerating. Across Asia, during the next decade some 500 million people will have access to electricity in their homes for the first time, driving exponential demand for a whole range of consumer household products. By 2025, China alone is forecast to create more than 200 new cities with a population greater than 1 million people.

Asia comprises a diverse range of economies across the continuum of emerging, developing and developed markets, with widely varying levels of sophistication and maturity in their supply chain and logistics landscapes.

In addition to geographic, economic, and political complications, there are significant challenges resulting from developing regulatory environments, inadequate infrastructure, and talent shortages.

However, with informed insights from experienced business partners providing deeper understanding about the diverse markets within Asia, companies can leverage external expertise to help them navigate the complexities in order to benefit from both production and consumption opportunities across the region.

Businesses should therefore embrace the complexity, and actively engage the knowledge and networks to provide the insights required to overcome the challenges, and capitalise on the smorgasbord of new business opportunities.