Global production bases that had been concentrated in China are dispersing to next-in-line candidates such as Thailand and Argentina. On the 25th (local time), Verisk Maplecroft, a U.K.-based risk intelligence research firm, named those two countries, along with nations such as the Philippines and Uruguay, as "rising stars" in global supply chains in its Global supply chain risk outlook report.
The company said that after analyzing 500 of the world's busiest ports and airports, 176 (35.2%) received a "high risk" or "extreme risk" rating in at least one category among geopolitical conflict, natural disasters, and domestic security. According to the report, one-third of the key supply chain chokepoints are in a condition where logistics could be cut off due to reasons such as conflict, environmental risks, and security instability. In particular, 5% of ports received an overall rating of high risk or above when multiple risk factors were combined, and major hub ports with high composite risk included Rio de Janeiro in Brazil, Lagos in Nigeria, Cape Town in South Africa, and Houston and Baltimore in the United States. These ports were assessed as posing a major threat to logistics stability because protests, strikes, and collective actions are increasing in the cities and countries where they are located.
Corporations are spreading their bases across multiple countries to reduce the risk that issues such as political instability or regulatory changes in a specific country, strikes, and natural disasters could shake entire production. Vietnam, Malaysia, Mexico, and Brazil, which grew by absorbing volumes as U.S.-China trade slowed, are representative. Verisk Maplecroft judged that supply chain risks borne by multinational corporations are growing in all four of these countries. In particular, Brazil and Mexico, along with the United States, India, and Myanmar, ranked among the top 10 countries with the highest risk of business stoppages due to protests and riots over the next year. Mexico simultaneously earned the dubious distinction of being the country with the largest increase over the past year in attacks targeting commercial facilities. In Vietnam and Malaysia, as investment by Chinese corporations and production using Chinese-made components increased, the risk of U.S. tariff and origin-of-production investigations has risen.
By contrast, Thailand was classified as a country where risks have declined over the past five years compared with regional competitors. Thailand is Southeast Asia's largest base for PCB (printed circuit board) and HDD (hard disk drive) production, and U.S. company Western Digital alone employs more than 28,000 people in Thailand. On top of that, investment in artificial intelligence (AI) has overlapped, bringing a boom to the electronics industry. Infineon Technologies AG is building a new back-end (semiconductor packaging) plant in Samut Prakan, and U.S. firms Lumentum, Microchip, and Fabrinet have also expanded production. According to the Bangkok Post, last year U.S. corporations alone applied to invest 32.774 billion baht (about 1.4 trillion won) in Thailand. Based on its hardware manufacturing capacity, investment is also pouring into data centers. In January last year, TikTok (ByteDance Ltd.)'s Singapore entity unveiled an investment plan worth 126.8 billion baht (about 5.4 trillion won) to build server and data storage and processing facilities in Thailand.
As the United States has imposed high tariff on Chinese electronic components, demand for Thai-made substitutes has also increased. In particular, the fact that HDDs, a flagship Thai export, were excluded from tariff imposition helped boost exports to the United States. An aging population and higher labor costs than other Southeast Asian countries are clear weaknesses for Thailand. However, the report assessed that its advantageous position for attracting higher value-added processes beyond simple assembly, and its distance from China's sphere of influence, outweigh those drawbacks.
Argentina is raising its profile in global logistics networks more on political realignment than on industry. In the late 1940s, under a leftist Peronist government, Argentina pursued protectionism and a state-led economy, and kept its distance from the United States. After roughly 80 years, the tide turned when Javier Milei, who champions a free market and small government, took office as president in December 2023. Last year, as U.S. President Donald Trump, who is ideologically aligned, took office, the two governments quickly drew closer. In October last year, the U.S. Treasury opened a $20 billion (about 30.86 trillion won) currency swap that propped up the faltering Argentine peso.
A trade agreement is another product of the two countries' closeness. After the two sides agreed in principle in November last year on a reciprocal trade and investment agreement, they formally signed it on Feb. 5 this year. Minerals sit at the heart of the pact. The United States has long relied heavily on China for lithium and copper used in electric vehicle batteries, advanced weapons, and semiconductors. But under the agreement, Argentina pledged to support U.S. corporations' investments in critical minerals in cooperation with provincial governments and to make the United States, instead of China, its priority trading partner.
After the Milei administration created the RIGI system, which grants tax and legal benefits for large investments of $200 million (about 310 billion won) or more, capital poured in, to the point that projects totaling $45.6 billion (about 70 trillion won) in Argentina's mining sector alone came up for new review. As of June this year, mining intelligence firm Industrial Info Resources tallied 80 lithium mining projects under way in Argentina, with investments exceeding $24 billion (about 3.7 trillion won), as of June 8. Korean corporations are also participating. POSCO said it would expand its Sal de Oro lithium project in the Catamarca and Salta regions to produce 23,000 tons of lithium carbonate annually and export $300 million (about 460 billion won) worth each year. Canada's McEwen Copper won approval for a $2.672 billion (about 4.12 trillion won) investment plan to develop the Los Azules copper mine in San Juan Province. Anglo-Australian global mining giant Rio Tinto has also stepped into the lithium business.
Across South America, Chile and Uruguay also made the shortlist. Uruguay, in particular, was assessed as having the most stable business environment in the region relative to risk. However, Latin America has not yet established itself as a large-scale manufacturing base to the extent of Southeast Asia. In Asia, alongside Thailand, the Philippines was also mentioned. The Philippines suffers from chronic domestic instability, but it clearly has the advantage of a young, English-speaking labor force. Laura Schwartz, senior Asia analyst at Verisk Maplecroft, said, "If corporations are confident in supply chain management systems that monitor and manage corruption risks, domestic instability is not a complete barrier," and added, "The Philippines has strong potential in industrial services and outsourcing."