Page 27 - FoodFocusThailand No.173 August 2020

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The World After COVID-19:

Changed Situations, Changed Strategies

Social distancing policies and obstructed flows of international trade due to stagnant economic activities across
the world have rammed the global economy back into a severe recession. The most heavily affected industries
are retailers, logistics, and tourism. The global Purchasing Managers’ Index (PMI) for the manufacturing and
service sectors has plummeted (Source: World Bank) along with investors’ confidence and consumer products,
and capital investments in the newly emerging markets have been pulled off.

posed by trade protectionism and tariff barriers, (to avoid crowding in the malls), DIY tools (as work-from-home individuals have more
which have affected the global supply chains. time for home improvement), and virtual tourism, which can branch out into online souvenir
The latest COVID-19 crisis has also added further market and is becoming a popular trend among senior consumers who want to avoid
fuel to this exodus fire (Source: Office of traveling during this difficult time (Source: Office of Commercial Affairs (Thai Trade Center),
Commercial Affairs (Thai Trade Center), Berlin). Los Angeles).
The president of the European Commission Opinion: Work-from-Home policy is becoming a new normal, both at the organizational
commented that many EU enterprises are overly and individual levels, as it lowers meeting costs, provides an improved quality of life for
dependent on the Chinese supply chains, and employees, and strengthens family relationships. It can possibly be a new standard for
France and Germany have embarked on a consumer behavior that is worth keeping an eye on.
collaborative project to retrieve their security- Food Security Gains More Importance Food importers such as Singapore, Indonesia,
related industries, such as medicines and 5 Brunei, and the Philippines have elevated the importance levels of their food security,
medical supplies, from China and relocate them especially in the current situations in which food supply chains are heavily affected. These
to EU or other countries. Meanwhile, China also economies tend to secure food security through more diverse means such as increases
adopts the China Plus One policy to spread its in food production, food manufacturing investments in neighboring countries, and
supply chains among various nations (Source: collaborations on contract farming. Brunei, for example, has poured huge investments
Fitch Solutions) to mellow the trade war impacts. into agriculture and livestock in the northern Australia while Singapore has entered into
Opinion: This is an opportune moment to a contract farming agreement with chicken egg farmers or farm owners in Ukraine.
attract investments to Thailand, and especially Opinion: This is a good opportunity for Thailand as the Kitchen of the World to extend
to the EEC, to boost up the economy, particularly our food-related collaborative efforts to other countries.
in high-demand sectors such as medicines,
medical supplies, logistics, and foods.
China Plus One Strategy Expands the
3Chinese Supply Chains Into ASEAN
COVID-19 has rekindled the China-United States
trade war, possibly with a new degree of intensity,
forcing Chinese manufacturers to spread their
supply chains and continuously relocate
manufacturing bases to ASEAN nations. This to
avoid trade retaliation and tariff barriers that may
sprout from the trade war, which is expected to
worsen during the US pre-election period in the
end of 2020. Nevertheless, the differences in
development levels of the ASEAN economies
translate into different degrees of investment
attractiveness. Vietnam, for example, is known
for low labor cost while Thailand boasts high-skill
labor. The distribution of Chinese supply chains
in ASEAN can only be carried out step by step
due to the enormous size of China’s manufacturing
sector. China’s total industrial production value
in 2018 was at USD 4.4 trillion, thus making it
impossible to relocate all manufacturing plants
to ASEAN in a short period of time.
Opinion: The high-speed railway now
connects China to Vientiane, thus greatly
reducing the obstacles of the supply chain
connection with China.
Social Distancing and New Opportunities
4 Manufacturers may see new opportunities
arising from the changing consumer behaviors
due to social distancing measures. The US
industries that are thriving in these circumstances
are, for example, bicycles (to avoid public
transport), fitness equipment, local grocery stores

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