The global supply chain's shifting direction is back on track.

DNHN - After a three-year hiatus caused by the pandemic, the global supply chain is gradually returning to normal. Post-pandemic activities and requirements are undergoing substantial changes.

Impact of macro factors on the supply chain

Over the past two decades, globalisation has occurred at a rapid rate. Since the outbreak of the pandemic and the emergence of geopolitical tensions in recent years, only then has this rate slowed. This has prompted the majority of nations to consider and prioritise security and trade protection. Governments seek to increase domestic production and safeguard vital industries, such as energy, food, and minerals, as well as advanced technology, such as the production of semiconductors and electric vehicles (EVs).

Moreover, geopolitical fluctuations have had an impact on international capital flows into the real estate market in general. It also affects particular types of real estate, including logistics, factories, and manufacturing facilities in North America, Europe, and Asia-Pacific.

These factors have influenced the shift from "offshoring" to "reshoring," "nearshoring," and "friend sharing" as the factory location selection strategy. Clearly, "offshoring" occurs when a company is founded in one country but establishes production lines or utilises resources in another country to support its production and business. In contrast, "reshoring" or "nearshoring" refers to the tendency to relocate production within or close to the country of origin.

North America region

"Resilience" has become an essential keyword for North American supply chain managers. However, cost remains the most important consideration when selecting a location for production and storage. In recent years, opportunities associated with "nearshoring" have increased, particularly for manufacturers in the Northeast Asia region. However, many U.S. companies continue to outsource in these regions to take advantage of lower labour costs.

The Inflation Reduction Act of 2022 may alter this course of action. Important American industries, such as green energy and clean technology, are being offered substantial relocation subsidies and tax breaks. The government has also introduced similar incentives through CHIPS and Science (the United States Semiconductor Manufacturing Incentive Act), which were enacted to reduce the United States' reliance on imports of semiconductors from the United States. Korea and Taiwan. Consequently, this Act is accompanied by a $ 280 billion budget, of which $ 39 billion will be spent to stimulate the domestic semiconductor manufacturing industry and $ 13.2 billion for research activities. Human resource research, growth, and training.

This policy has contributed to the boom in manufacturing plant construction in the United States. Companies like TSMC, Intel, and Samsung have announced plans to build semiconductor factories in the country, and by the end of 2026, more than 20 electric vehicle factories are expected to be operational.

Europe area

Due to the pandemic and the growth of online retail, the demand for warehouses in Europe has decreased substantially. However, supply chain security and the need to invest in green technologies will have a significant impact on logistics demand in this region over the medium term.

Therefore, "nearshoring" is used to create more real estate investment opportunities in Eastern Europe, particularly in countries that have strategic cooperation with the European Union (EU) and possess large, inexpensive labour forces.

This emphasis on supply chain security will have a slow trickle-down effect on warehouse and manufacturing plant demand in the commercial real estate market.

Asia Pacific region

China continues to be the "world's factory" and is responsible for approximately 30% of global production. This nation's competitive advantages include a relatively complete infrastructure, a high level of human resources, and the capacity to integrate deeply into the global supply chain.

However, the high cost of Chinese labour makes this market less attractive than it once was, particularly when incentives for businesses to return home and establish factories are considered. Currently, multinational corporations, such as Apple, are establishing fewer new factories in China.

When considering alternatives to China for the relocation of manufacturing facilities, Vietnam emerged as an ideal location due to its proximity, skilled workers at competitive wages, and well-developed infrastructure.

Vietnam's industrial real estate market has been altered favourably as a result of this opportunity. Mr Thomas Rooney, Senior Manager, Industrial Real Estate Division, Savills Hanoi, stated: "The Purchasing Managers' Index (PMI) for production lines and the Industrial Production Index in Vietnam are both positive. The market continues to record significant investment transactions, and fundamental activities are quite active." However, the current state of the global economy results in a decline in aggregate demand. Thus posing a problem that the state must promptly address and combine with preventative measures to foster economic growth.

Regarding the near future, Mr. Thomas stated that from now until the end of 2023, transactions will continue and the supply situation will remain extremely abundant. Regarding the availability of factory buildings, provinces such as Hai Phong will become more attractive to investors and tenants. In addition, Bac Ninh is an ideal location for domestic and international tenants as well as investors seeking to develop ready-built warehouses, as this city has risen to the third spot in terms of investment attraction. FDI funding.

The shift to a global supply chain creates numerous new opportunities but also presents certain obstacles. Therefore, the Vietnamese market must grasp trends and seize opportunities quickly and completely to make the most of them and achieve success.

Nguyen An