The China Plus One strategy has been talked about as early as the early 2000s when multinational companies investing in China spread out their risks and “ensure that the supply chain in the Asian production network would not be disrupted at any point of time”^ due to reasons such as corruption, pollution, and other factors.

Fast forward to the late 2010s, the deepening rift in trade relations between US and China, and the rising protectionist sentiments towards the harmful impacts of globalisation, which spurred the withdrawal of the US from the Trans-Pacific Partnership (TPP), have shifted global supply chains. A protracted COVID situation has further increased nations’ reliance on domestic demand to drive economic growth and might regionalise supply chains.

ASEAN has been touted as one of the key beneficiaries of the China Plus One strategy. In fact, ASEAN replaced the European Union as China’s biggest trading partner in the first quarter of 2020. The growth of the middle class in ASEAN will further draw investors to the region to tap on the market.

Besides geopolitical tensions, there are also several factors that are pushing investors to find a Plus One country to tap on other opportunities:

  • Nationalistic sentiments of population which may turn against brands and companies based on their countries of origin
  • Rising labour cost – Beijing raised its minimum wage by 63% between 2010 and 2016
  • Shortage of skilled labour – and situation will worsen with the effect of the one-child policy

The “China Plus One” strategy presents ASEAN citizens a huge opportunity in the years or decades to come, and uplift the work and living standards in the region.

^Ho Khai Leong (2009), Connecting & Distancing: Southeast Asia and Chinese, Institute of Southeast Asian Studies Publishing, Singapore

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