How COVID-19 in Southeast Asia is Threatening Global Supply Chains

Coronavirus outbreaks across Southeast Asia have severely disrupted factory production rates, leading to decreased productions of goods like apparels, automobiles, and electronics. Vietnam, Malaysia, and Thailand are the top manufacturing hubs in Southeast Asia as cheap labor is readily accessible in many of these region’s densely populated urban cities. The lower cost of production in these regions has made them particularly attractive for global tech firms like Apple and Samsung as well as big name consumer brands like Nike and Adidas. Southeast Asian countries play an important role in producing goods for their neighbors across the globe, as evidenced by how their limited production during the pandemic has negatively impacted U.S. companies. For instance, Nike cut its fiscal 2022 sales expectations, Apple announced that their new iPhone 13 will take longer to arrive for consumers, and many international fashion brands have shifted their orders away from Vietnam and Mayalsia. Other industries like food and rubber have also been heavily impacted by the shortage of migrant workers during the pandemic. As a result of these production shortages, many companies have temporarily relocated their factories to other more viable locations, like their company headquarters. 

While it’s unfortunate that the pandemic has led to a global decrease in production, I wonder if this also gives workers and employees in Southeast Asia more leverage to be able to negotiate wages and better working conditions. Traditionally, the power imbalance has tipped in the favor of the larger corporations who can lock in workers for really low wages and undesirable working conditions, but maybe the labor shortage could give way to a better situation for employees. 

Sources
https://www.reuters.com/world/asia-pacific/how-covid-19-southeast-asia-is-threatening-global-supply-chains-2021-10-06/
https://economictimes.indiatimes.com/news/international/world-news/how-covid-19-in-southeast-asia-is-threatening-global-supply-chains/articleshow/86807268.cms