Southeast Asia Grapples with Challenges as ‘China Plus One’ Strategy Falls Short

The “China plus one” strategy that drew global manufacturers to Southeast Asia is yielding mixed results for the region. While billions of dollars have been invested in new factories, Southeast Asia is not reaping the full benefits it had anticipated. Meng-Chun Liu of the Chung-Hua Institution for Economic Research notes that while the strategy brought factories and jobs, it did not transfer the design, core components, and process know-how that capture most of the value. Vietnam, Southeast Asia’s standout economy, focuses on final assembly rather than manufacturing intermediate components. Frustrated by the region’s underdeveloped factory ecosystem, companies like Target are…