The Sourcing Elite Board (SEB), established by Global Sources, is a membership-based club limited to invited top professionals in the industry. Currently, the club has over 50 members and networks in Shanghai and Hong Kong, primarily consisting of senior management from the sourcing industry and professionals with academic backgrounds. SEB organizes internal sharing events that facilitate in-depth discussions on sourcing strategies, e-commerce innovations, and insights and forecasts on the global economic landscape. It aims to inspire innovation, push industry boundaries, and provide a vibrant exchange platform for experts and practitioners in sourcing.
Recently, Chief Executive China invited Valerio D'Angelo, Director of AROCA Group, for an exclusive interview where he shared insights on supply chain diversification and corporate strategies in response to recent tariff developments.
Valerio D'Angelo is an expert in public affairs and international corporate strategy, holding senior positions in several Fortune 500 consumer goods companies in Europe and the US. AROCA Group is recognized as one of the leading public affairs consulting firms in Southeast Asia, focusing on providing clients with executive training, in-depth policy analysis, and unique public affairs consulting services.
Chief Executive China (CEC): What impact do tariffs have on globalization?
Valerio (VD): I don't think there will be a significant impact because tariffs have always existed. However, it is clear that tariff conflicts will reshape relationships between countries, but this does not mean that the trend of economic integration will be hindered. The current world is adjusting; the extreme globalization we once knew, or the rapid globalization process, will slow down. But from a trend perspective, I believe integration among countries remains an inevitable direction. This restructuring will certainly affect globalization, but quantifying that impact is difficult.
In a world that has already experienced globalization, I don't think the effect will be too significant. Moreover, globalization promotes technological advancement, such as the Internet and artificial intelligence. From the perspective of economic integration, it may indeed cause some slowdown, but I believe this is just a phase of restructuring.
CEC: You argue that the current turmoil in international trade is a result of the combined effects of economic, political, and technological factors. What are the main goals that major economies are trying to achieve during this adjustment process?
VD: I think their main goal is diversification. The current turmoil is just a process. Major economies are attempting to diversify their sourcing and supply chain systems. This is a result of the COVID-19 pandemic, which severely disrupted the supply chains of many countries and economies, leading to a heavy reliance on the manufacturing sectors of two or three countries. Therefore, this is an attempt by major economies to diversify their supply chains post-crisis. As for large corporations, they started doing this 12 to 15 years ago, even before the pandemic. I believe this is just a diversification measure to minimize supply chain disruptions.
CEC: Do you not think that major economies may view each other as conflicting targets, but rather that economic integration is the future direction?
VD: I believe that’s the case.
CEC: Some suppliers have already set up factories in Mexico or Vietnam, but the US government is also keeping an eye on these regions. In your view, will the US government support all countries that include Chinese manufacturing in their supply chains? Should companies in the supply chain prepare contingency plans for a US-China decoupling?
VD: I don't think the US government is specifically targeting any one goal, as they are also considering tariffs on Europe. It's not aimed at any specific country. I still think this is part of a larger trend toward diversification. Moreover, I don’t believe comprehensive decoupling will occur. In July and August, you could already see a thaw in relations between the US and China, and there are attempts to reach agreements. Therefore, I don't think a large-scale decoupling will happen.
Aside from diversification, there are economic factors driving the return of manufacturing, but I still don't think the US and China are heading toward comprehensive decoupling. I don’t believe the US government is targeting any specific economy or production location. However, the US government's actions are indeed somewhat unpredictable, shocking the world and making it difficult for companies to maintain stable production. I must emphasize that this is due to the world restructuring, and major economies are reshaping their supply chains. This is a very important moment.
CEC: Do you believe that US-China decoupling is not the ultimate direction, but rather a way to find more options for the supply chain?
VD: I think so.
CEC: What do you think is the most effective strategy for risk avoidance in supply chains?
VD: It depends on how you view the issue. From an economic perspective, or from the perspective of private enterprises, diversification is the most effective. Many countries and large companies began diversifying their layouts 15 to 20 years ago. This is purely from the sourcing and supply chain perspective. Of course, increasing investment in technology is also a response method. Technology can optimize all relevant functions in the supply chain. Sustainability is critical as it ensures companies can reduce the impact of supply chain disruptions to the greatest extent possible. Although this also depends on the type of disruption and the reasons behind it, generally speaking, I believe sustainability can provide companies with some advantages.
CEC: What countries and regions would you currently recommend companies focus on? What are the reasons these areas attract you?
VD: This question is hard to answer because it varies by industry and the criteria used for evaluation. Industries like toy manufacturing, for example, which rely on molding, need locations with an established ecosystem, such as automotive industries, and a suitable labor market. Therefore, they often consider regions like India, China, Vietnam, and Turkey for integration.
However, it is clear that Asia remains the core of global trade, including China, Vietnam, and Indonesia. Some regions are also showing significant upward momentum, such as Turkey, which has a geographical advantage and has established special trade relations with the EU. Other areas, like Africa, are also experiencing notable growth. Africa’s development has attracted widespread attention. There are many variables in the future, but currently, many are focusing on Africa. Among the rapidly developing regions, I believe these three categories are the most noteworthy.
CEC: For companies looking to seize opportunities in digitization and sustainability, what advice would you offer?
VD: If they already have plans to seize opportunities in digitization and sustainability, I think they are heading in the right direction. This path is correct. Sustainability and digitization are effective ways to ensure that companies can act agilely in response to supply chain disruptions. Digitalization lets businesses automate and streamline operations, use data for smarter decisions, improve customer experience, reduce costs, and scale and innovate faster. The digitization process is unstoppable; it can accelerate business operations, improve processes, and reduce costs. What I can say is to increase investment in digitization and sustainability while ensuring these investments align with the company and business needs. But aside from addressing supply chain disruptions, companies should also invest in their employees to gain a competitive advantage.
CEC: Can you provide a few examples of how companies can fully utilize these opportunities?
VD: Sustainability is a broad concept. If we narrow it down, we can talk about environmental protection, which is a very important factor today. Ensuring that companies follow certain environmental regulations in procurement is crucial. There is a lot related to this in free trade agreements (FTAs). Just like with other regions, to reach trade agreements with the EU and obtain tariff reductions, sustainability and environmental protection must be key considerations and standards.
Additionally, it can enhance consumer appeal, as consumers today are very environmentally conscious, which can influence their purchasing decisions. They prefer to buy products that meet sustainability standards. Often, they want their purchasing behavior to have environmental significance. Thus, environmental issues can help companies gain a competitive advantage. Therefore, these two factors are strategically significant for the future success of companies.
Established in 2022 by Global Sources, the Sourcing Elite Board (SEB) is a collaborative initiative dedicated to advancing the sourcing industry through shared expertise and innovative strategies. Senior executives, from buying offices to retailers and brands, are welcome to join this distinguished community.
• The content of this interview reflects only the views of the interviewee and not necessarily those of Chief Executive China or Global Sources.
