All right. Hello, everyone. Hope you're doing well today. Thanks for joining us. We have a great webinar topic to get into today. My name is Nick. I'm a director with our Onyx Group, and I'll be your host and also moderating questions throughout the event. And then I'll be introducing our two speakers here shortly. All right. So we offer different webinar topics each month. This month, we actually have two. We had one a few weeks ago, more of a Q&A session. And this one is probably more kind of traditional Onyx webinar where we're going to share a lot of information. Today's topic is the dynamic of how Chinese exports have surged to other parts of the world, and this activity has led to reactions and various policy approaches by other regions. We'll take you through that, what we're seeing in key markets around the world, and we'll have a couple of polls for you to submit your feedback throughout. As always, we'll take audience questions throughout and at the end of the presentation as well. We have about 50 minutes of content with time for Q&A at the end. Please, no need to wait. If you have questions, go ahead and use the little Q&A at the bottom of your screen to submit that at any time. If it's relevant, we'll address that question in the middle of the presentation. But again, we'll leave room at the end as well. We often get questions. People like to get a copy of our slides that we share. We're definitely happy to share that with you. The way we do that is we send out a short survey at the end of the presentation. I think it's like five or six questions, pretty quick, and if you answer that survey, it gives us great feedback. Do you like the content? Anything you'd like to change or just any kind of general feedback you want to offer, so it's helpful for us, and then by filling out that survey, you'll be taken to a link where you can download the slides and get a copy of that for today. If you'd like to get information about future webinars, you can subscribe to our VantagePoint blog, so there's a little QR code there, and you can add your email, and you'll receive at least a monthly digest. You'll also get invitations to our webinars, so it's a great way to make sure you don't miss those. Okay. We do plan to have a webinar for March. We haven't quite locked that down yet. So nothing to announce on that topic. But just like I said, subscribe to our VantagePoint, follow us on LinkedIn, as you can see here. You won't miss it once we announce that, tentatively in a few weeks, kind of later March timeframe. On LinkedIn, we also post a lot of information, all of our kind of short insights, short form, things like what you see on screen right now, as well as anytime we do a long-form piece, which is posted on our VantagePoint blog. You'll also be alerted if you're following us on LinkedIn. So just a couple of ways to kind of stay in touch with Onyx. Follow us on LinkedIn, subscribe to the blog, and you'll pretty much get everything that we publish on a regular basis. Okay. So a little bit briefly about Onyx, if you're not familiar with us and who we are. So we are a division of Expeditors, and we help companies build adaptable and resilient supply chains. We do that by focusing on different geopolitical, economic, operational disruptors. We work with our clients as an advisor, so as an ongoing partner throughout the year. That comes in different forms. And then we also do individual projects where companies want us to do a deep dive on a country, kind of evaluate different risks, sourcing, destination markets, kind of all across the board. So we're essentially an advisory firm division within Expeditors, really built to help companies create kind of resilient supply chains. That's our vision. That's what we do. Really briefly as well, we offer different services, different service lines that cater to different groups. You can see examples of those on screen here. Anything from monitoring regulations to assessing cost of purchasing items and how those are projected to grow over time. We look at different shocks, geopolitical shocks, logistics shocks. So some of these services are more of that advisory monitoring kind of service in nature, and other things like a country cost and risk analysis, typically more of an individual project. Say you're looking to change your sourcing and evaluate a new country, for example. That's a pretty typical example there. So just some examples of our work and our services. So if you're interested, feel free to reach out to myself or one of our speakers. We'd be happy to speak with you more on those. Okay. So with that, I'd like to introduce our two speakers we have today. First of all, Olivia Tan is a senior analyst in Onyx's Asia practice and leads the firm's work on China, in addition to other regional and industry-level analyses. Prior to joining Onyx, Olivia was an Asia analyst in the corporate intelligence sector. Also speaking today is Suryo Nugroho. He's a seasoned Southeast Asia policy expert with 12 years of experience in policy and analysis, geopolitics, and supply chain management. He currently leads Onyx's Southeast Asia work and previously worked for six years at the Asian Development Bank Institute in Tokyo and the ASEAN Secretariat in Jakarta. So with that, I'm going to hand it over to Olivia, and we have a few sections to go through, and Olivia will kick us off with the first section and, I think, give just an overview of the flow of the presentation today. Thank you, Nick. I think that was a wonderful introduction by Nick, which sets the ground for a lot of what we're going to talk about this webinar. And really, the design of this webinar, when Suryo and I sort of wanted to reach out to our audience, is to look at what the rest of the world was doing in response to E.U. and U.S. policy and what that meant for the rest of the world's relationship with China. So I think there's a lot of focus right now because of the rise of the Trump administration on U.S. and E.U. trade policy. But the rest of the world is a really important geography to think about, especially as we see a lot of our clients moving to these friend-oriented countries and emerging markets that they previously have not really explored. So I think that's the design of the webinar to really pivot the focus back to this rest of the world concept. We have three brief sections here today. Firstly, we'll do somewhat of a brief digest of the recent tariffs and trade policies coming out of the Trump administration and the impact on that on the E.U., as well as on developing and emerging markets elsewhere. In section two, we'll look at trade barriers to Chinese goods in the developing world. So for the markets that I think a lot of folks are interested in, Southeast Asia, Latin America, how are they responding to Chinese goods? I think that's also an important topic to discuss. And lastly, I think Suryo will round us off with how the developing world is still pursuing Chinese investment and capital and what that means for you as you sell in these other markets as well. So I think with that, quite a lengthy three sections. So we'll try to take breaks in between with polls. But again, as Nick mentioned, if you have any questions, drop them as you wish in the Q&A box. You don't have to wait till the end. All right. So I'm going to go ahead and get started with section one. A lot of people, I think, have been watching very closely what's coming out of the Trump administration, in particular in China. And the top-line observation that we really have is this, right? The opening volley in trade policy from the Trump administration towards China is actually still very measured. What I think Trump has promised on the campaign trail against China is quite different from what has been implemented so far. I think so far is the key word here. Trump appears quite interested in negotiating for a deal with China, but there definitely are complications as to how this might come along. So I think for now, on the left-hand side, this is what we know so far, right, from the January tariffs. If we look at the tariffs section over here, Trump really views tariffs as a tool to correct global trade imbalances. I think that's why there's such a broad-ranging desire to kind of use it in multiple trading relationships. Accordingly, in the policy impact, I think this comes as no surprise to anyone that the trade-weighted average U.S. tariffs on Chinese exports have climbed quite a lot from the start of 2018 during the first trade war to about close to 20% in 2023. And this is trade-weighted. I think what's more interesting or important for clients is on the right side, which is the potential developments in the coming year. There are a few signposts for escalation that we've listed here. So on April 1st, we have a lot of studies that the administration commissioned are coming due, right? We have Phase I studies, Section 301 tariff studies, Permanent Normal Trade Relations studies all being due on April 1st. So when these studies are out, this could prelude further trade action from the Trump administration on China. So I think we're also starting to become a little bit clearer on timeframe and how the U.S. intends to move on China. On Taiwan, though, I think in mid-February, there was the idea floated of 25%-100% tariffs on semiconductors from Taiwan. Obviously, we're past mid-February. So I think that timeline is still a little bit unclear. But I think these kind of actions will start becoming more frequent, and it's more important to monitor the exact timeframe that they're kind of sitting in gestation. A key constraint on escalation, however, is that Trump does appear quite interested in negotiating with Xi himself. I think there's a lot of interest in that personal connection. But one thing to note is the ideological dissonance with trading with China, with China investing in the U.S. within Trump's China team, but also between the president and his own China team as well. So this is a very broad overview, I think, on U.S. tariff policy on China kind of going into the next few months. But what's immediately important for clients is probably that April 1st due date for studies. On the de minimis side, we've had a few clients become, I think, quite interested with the impact to e-commerce with the de minimis action in January. And I think here, we'll talk a little bit about it. The aim of revoking China's de minimis benefits is really to address synthetic opioid flows through de minimis packages, which, in other words, if I can put it very simply, is to address the flow of fentanyl through de minimis packages into the U.S. That is sort of the main concern of the administration, and obviously, I think the policy impact varies to consumer demand based on product-specific tariffs. But what we could see is a further push in the modal shift from air to ocean as these major Chinese e-commerce players look to pre-position inventory in warehouses in the U.S. or in the E.U., and there is, I think, more of a cost consciousness in opting for ocean shipping rather than air freight. In terms of signposts for escalation on de minimis, even though the executive order has been paused, there is still strong congressional interest and strong congressional action on revoking de minimis privileges for China outbound parcels. So even if the Trump administration doesn't act on de minimis through an EO, Congress could always do so with bills. A key constraint, however, is that the effectiveness of revoking de minimis in terms of trying to push out Chinese e-commerce platforms from the U.S. consumer market is that the effectiveness of this is eroded by the fact that they're localizing a lot of distribution centers and warehouses in the U.S. as well and in the E.U. And there's a lot of inventory pre-positioning, as I've mentioned. And all of this allows your Shein and your Temu to kind of sustain their business in the U.S., even with the revocation of the de minimis privilege. If you've attended our past few webinars, I think we've talked quite a bit about de minimis in each of these webinars. But this is definitely the current trend we're seeing towards stronger enforcement, revoking China's benefits for de minimis, and the corresponding changes in strategy by Chinese e-commerce firms. All right. So again, I think we need to talk about China's response here. If you've been reading your headlines, you will see that China has responded to the U.S. tariffs in January. And this is actually quite restrained and quite surgical. China still has a lot more room for escalations or concessions if a deal is reached. Here, what we're trying to do is to map out for clients what that escalation looks like on the product level and on the firm level. If you look at the product level, right, we've split this into industries: minerals, energy, autos, machinery, electronics, agricultural, pharma, consumer, and these three sort of buckets of measures that China can retaliate with. On one hand, it can reach for the import side of things, right, through tariffs, bans, quotas, and licensing. On the other hand, it can reach for the export side of things, and then they could also tax imports internally. And we've kind of marked what we think are the most likely measures in each of these industries. And this makes intuitive sense once you think about the characteristics of each of these industries. For instance, China exports a lot of metals and minerals. It has strong processing power in these metals and minerals. So for instance, gallium, germanium, molybdenum, this kind of commodities, I think China has already acted on them through export bans or export quotas or even export tariffs. But for industries like machinery and electronics, where China is both a major importer and a major exporter, you could see them reaching for all three buckets of measures across the board. And I think we also have prepared more detailed measures within each of these industries, as well as the specific HS codes that we think China is likely to retaliate in. So if that is of interest to you, please do reach out to us as well. The other kind of measure I think we've seen Beijing reach for recently is escalation on the firm level. So targeting one to two or a group of firms to make the point about retaliation. And its toolbox to do so has grown substantially more sophisticated since the first trade war in 2018. I'm listing here, I think, the Unreliable Entity List, the Anti-Foreign Sanctions Law, antitrust investigations, asset freezes. All of this could target specific firms or specific people in order to limit, I think, the broader economic fallout onto either China's economy or its exports. For instance, you would see in the news that Nvidia and Google were being investigated for antitrust in China. So this is one way in which they can kind of do a firm-level escalation. So if these are all the ways that China can ramp things up, we also have to talk about the potential concessions that could occur in a potential U.S.-China trade deal. China could fulfill the previous terms of its phase I Deal, which it never did, actually. This could include purchases of U.S. agricultural goods. China could invest in domestic American manufacturing. But this, again, raises questions about the administration's interest in a reverse CFIUS type of mechanism and inbound investment screening type of mechanism. So that one's a little bit iffy. China could remove sanctions from individuals, American firms. It could pursue a Plaza Accord-style kind of currency agreement. This could potentially look like an increase in the RMB valuation and impacts on exports, right? So as the RMB goes up, the price of China's exports go up, and that could kind of make its goods less competitive. And lastly, it could also open up Chinese markets, right? Providing access to Chinese consumers, removing non-tariff barriers, providing stronger IP protections for American firms. All of these are economic and trade concessions that China could very well afford the U.S. in a kind of trade deal. And in return, it could receive geopolitical concessions on the South China Sea or even on Taiwan that Trump has hinted at. All right. So I think we have to turn a little bit to the E.U. here, given all of the attention on transatlantic relations in the past few weeks. The U.S. has been very vocal about its grievances with the E.U., and that in turn has kind of pushed the E.U. to start preparing groundwork for a potential pivot on its China policy. Although I think there is a lot of hesitation and uncertainty on this front, and this pivot to China is still very much dependent on the direction of U.S. trade policy towards the E.U. When we think about Trump's grievances with the E.U., there really are plentiful. In terms of market access, right, Trump has complained about the E.U. trade deficit, looking for the E.U. to purchase more American goods. On defense, he's sort of encouraged higher defense spending in the E.U. He has also railed against regulatory barriers like the value-added tax, CBAM, tech regulations, and at the same time, I think in the Munich Security Conference, we saw Vice President J.D. Vance talk about how he perceives far-right parties in the E.U. being circumscribed on a domestic level. There is a lot of, I think, wariness around E.U. institutions and structures, so a lot of grievances with the E.U., and we believe that action is actually imminent. On 14 March, steel and aluminum tariffs on the E.U. take effect. On 1st April, as we've alluded to before, a lot of studies on the value-added tax and the America First trade policy, I would say scenario building is also due. So that could further herald trade action on the E.U. On 2nd April, we have 25% tariffs on all autos, farm, and chip imports into the U.S. And on 15 August, we have a study due on the reciprocal tariff. So you can see that from March to August, the administration is really teeing up a lot of major trade policy initiatives to take place. And that is something that clients have to continually monitor. That's something that we've really tried to stress in the past few months. The pace at which these things are being issued means you need to have someone kind of monitor them even on a weekly or a monthly basis. So what does that mean then for the E.U.? What should the E.U. do, and how does that kind of relate to China? On the de-escalatory front, the E.U. could provide visible concessions with quick political wins to Trump. So this could look like purchases of American goods, investment in American domestic manufacturing. The E.U. could focus on shared interests with the U.S., such as China. It could increase its defense budget to kind of preempt a lot of the trade action that is coming out from the U.S. Signals of this could look like negotiations between the E.U. and the U.S. So far, I think there's still quite limited contact between the E.U. and the new Trump administration. So that's not really, I think, a very positive sign for the E.U. On the escalatory front, the E.U. could escalate by cracking down on big tech through its Anti-Coercion Instrument. It could impose counter tariffs if the Trump administration moves forward with more tariffs on the E.U. I think signals of this would be unilateral moves from the U.S., limited contact, as I've alluded to, as well as division within the E.U. between its members. More importantly, though, a transatlantic trade war would be paired with a softening E.U. policy stance on China. There is a lot of concern, I think, in the E.U. over a two-front trade war, where you're fighting a trade war with the U.S. on one hand, and relations with China are not as good, so there are a lot of concerns over this two-front issue, and as a result, even in the past two months, right, in just the past eight weeks, we've seen substantially softening language from the E.U. on China, and this is paired with China's diplomatic moving of E.U. members. So there is, I think, the groundwork to kind of pivot here. The constraints, however, would be very long-standing trade and political tensions between the E.U. and China. And again, I think division within the E.U. members on how they should proceed with trade and investment with China. But I think this pivot is really something that we wanted to highlight as a result from the incoming Trump administration. All right. I think here we'll talk a little bit more about reciprocal tariffs. Reciprocal tariffs have taken up a lot of breathing room in this space in the past few weeks. And here, I'll very quickly explain what reciprocal tariffs are. So essentially, the Trump administration is determining what they view as an equivalent tariff based on existing tariff levels, taxes, subsidies, perceived currency manipulation, and other measures deemed to be unfair. And it works like this, right? If I'm country X and I place a 10% tariff on imports of American autos, the U.S. will now place 10% tariffs on autos imported from country X. So it's just tit for tat, right? Reciprocal tariffs. And we believe that these reciprocal tariffs, if they do come into place, they will prompt the rest of the world to diversify their trading partners outside of the U.S. And these tariffs are most expected to hit Korea, Mexico, and Japan. And if you look at this chart on the right here, this is a country-product pair by the value of U.S. imports. On the y-axis, you have the amount of U.S. imports at risk in U.S. billions of dollars. On the x-axis, you have the difference between the tariff levels of these two countries in a particular product. So how do I read this graph, right? Anything on the right-hand side with more than 10% tariffs suggests. I think we just lost Olivia. Sorry, everyone. Just give me a second here. We'll bring her back. I'll tell you what. We were about to get to a poll question. So we're going to go ahead and launch that now. We'll give her time to get back in. The internet always wins, I suppose. Sometimes it kicks you out. So let's launch a poll here. And we were going to ask this after the slidesheet was on. So we may have her go back and get to that. But go ahead and answer this right now and give us your thoughts. So kind of given sort of the backdrop of what she just went through, we'd love to hear kind of how you as a firm are prioritizing contingency measures given the rise in global tariffs. This is a ranking. So kind of one through four. We figure people are doing multiple things. And so it wasn't a one or mutually exclusive choice. So just a little bit different kind of poll since we've been doing this. We'll give you a second to answer. I know Olivia is trying to get back on. So just give her a little bit of time there. And just a reminder too, if you do have questions, use the Q&A function of the webinar. The chat is not enabled for us for today. So if you have a question or any feedback, anything you notice, go ahead and drop that in the Q&A. Okay. We'll just give you another second here to finish up. And I'll end this poll. Okay. So as you can see, hopefully there we go. Sharing the results there. You should be able to see that on your screen now, so I would say kind of first priority looks like inventory prepositioning is pretty significant, kind of maybe roughly balanced with diversifying into emerging markets. I mean, commentary there, I think diversifying, not a quick thing to do. Take some time studying the markets. Inventory prepositioning may be more of a near-term thing, so I could see people doing both of those. Excuse me, and then monitoring trade regulations is probably something you need to be doing anyway, so I think the final takeaway there is people are planning something. The not planning changes is the lowest priority. I think that's totally understandable, so it looks like Olivia is coming back online now, and I'm going to drop this poll out. Olivia, did the internet let you back in? Yes. Sorry. I am working with an extraordinarily temperamental machine. So if folks were disrupted by that, I really apologize. I think let's start over with this part on reciprocal tariffs. Thank you, Nick, I think, for taking over in my brief absence. Okay. Let's start over on reciprocal tariffs, right? We've heard a lot of concerns from clients as to what a reciprocal tariff is. To put it simply, if I were country X and I put a 10% tariff on auto imports from the U.S., the U.S. will now put that 10% back on me. That would be a very simplified example. But in reality, the US TR will determine what an equivalent tariff is based on the existing tariff level, the taxes, including value-added taxes, any kind of subsidies, perceived currency manipulation, and other measures kind of deemed as unfair. So it might not be a 10 to 10 kind of match. It could be a much higher or much lower depending on these other factors. So what we've done on the right here is to look at the country product pairs that we believe would be most impacted by a reciprocal tariff kind of strategy. And what would matter to clients is really anything, I think, from the 10% range on. So that means much higher tariffs first and foremost. And anything, I think, on the upper right-hand side, which would be a higher amount of U.S. imports at risk. And you can see that Japanese autos, Korean autos are quite exposed. Obviously, Mexico, sorry, U.S. imports a lot of autos from Mexico. There's a high value of U.S. imports, but its tariff difference is not as high. So I think these two are the product country pairs that we have to care about more. On the other hand, we could also look at Korean electrical machinery, where there is a very substantial tariff difference, but there's only really about $20 billion of U.S. imports at risk. So a chart like this, where it's country product pairs, can allow you to understand how is my industry impacted and from what geographies am I kind of importing and exporting out of when it's relating to the U.S. market. All right. So I think we've kind of gone through the poll earlier, so I probably won't repeat this. And I will go into the second section, which is trade barriers on Chinese goods in the rest of the world. This is something that we started observing, I would say, kind of around late 2022. And it was most obvious in Mexico because Mexico had put in these range of tariffs on Chinese goods across glass, across textiles, across steel. And we wanted to find out if this was a trend also in other emerging markets like Southeast Asia that people care about, like India, like MENA. So this is really what the section is designed to do, to examine if trade barriers to Chinese goods are rising in the rest of the world and in these friend-shoring locations that you care about. One thing that we've noticed from the data is that global markets are really increasingly concerned over trade with China. And they've primarily sort of responded to this increase in trade with China through domestic industrial support. But then again, trade restrictions are also rising post-COVID. If you look at this chart here, right, this is the number of harmful interventions imposed globally against China. This is every country in the world with the exception of China and Hong Kong. You can see that domestic industrial support is really much more popular than using trade restrictions. There is also a very clear post-COVID uptick. From year 2020 onwards to 2024, we're seeing about trade restrictions being in the 400s kind of range as opposed to 200 to 300 before COVID. There definitely is an uptick in trade barriers against China. What do I mean by domestic industrial support? These measures are not specific to China. Most of the time, they're aimed at building up local capacity or benefiting local manufacturers. This could look like production subsidies, local content incentives, local labor incentives, or even state aid subsidies, etc. Whereas trade restrictions would be specific to China. So for instance, initiating anti-dumping investigations on China, placing import tariffs on China, or also instituting technical barriers to trade. This data set is really powerful, in my opinion, because it's really clear you're able to see that very apparent post-COVID uptick in trade barriers against China in the rest of the world. But one thing that's important to note is that trade barriers are going up against China for sure. But this hasn't translated into higher global tariffs yet. If we look at weighted average tariffs on China across total trade, over time, Australia has actually dropped. Indonesia has kind of stayed flat, right? 0.71-0.75. The same can be said for Malaysia as well as the Philippines. Whereas the countries that have really kind of increased their tariffs against China in a substantial way would be India, right? India is very big, right? A doubling of actually trade weighted average tariffs on China, as well as Egypt, sorry, as well as Turkey, right? Turkey is also another big one. If you ask me what the gray boxes are, this is unfortunately because data availability is dependent on country reporting and HS code revisions. So for some countries, for certain years, we just can't get all of the data. But it's important to note that higher global tariffs on China yet are not as, I think, as don't see as dramatic an increase. Nonetheless, I think the impetus for more trade restrictions on China persist. And a big part of that has to do with access to the U.S. market. Emerging markets are increasingly under American pressure to clamp down on trade diversion. We saw that emerge in the Biden administration, and it's definitely going to continue in the Trump administration. If we look at U.S. goods imports by exporter, right, this is the growth rates. U.S. imports from China have fallen about 6%. I think that's of no surprise, but Taiwan, Thailand, Canada, and Ireland have kind of increased a lot in terms of exports to the U.S., so the Trump administration, we're very interested in tracking how much of this growth in U.S. imports from other economies is Chinese companies routing their goods through third countries. In 2022 and 2023, in the Biden administration, we saw quite a few anti-dumping, anti-subsidy, and anti-circumvention investigations on goods from Southeast Asia, on goods from Philippines, Vietnam, Thailand, so on and so forth, so the Trump administration is likely to continue that. He may reach for punitive import tariffs or try to renegotiate or cancel existing free trade agreements or other forms of trade agreements with American trading partners if they're perceived to be allowing Chinese goods to reroute through their economies. Key target countries we believe are ASEAN, Taiwan, and Mexico, particularly under scrutiny, and really, if our policymakers are sitting in these three geographies, right, I would be very incentivized to crack down on diversion because I want continued access to the U.S. consumer market, right, which oftentimes is one of the biggest destinations for my goods, so I think third countries are particularly incentivized to crack down on Chinese trade diversion with a focus on lower value goods like furniture and textiles that could be routing their way through our economies. The other thing to note also is that as trade barriers are rising against Chinese goods in these developing markets, a lot of it also boils down to domestic protectionism. The developing world is particularly, I think, surgical in the way that they act against Chinese goods. They will likely wield import tariffs very surgically, defending against the inflow of low value goods and on commodities while allowing Chinese inputs and intermediates that are needed for domestic manufacturing to enter. So what does that mean? Let's kind of break it down bit by bit. If you look at Chinese iron and steel exports to Latin America over the past five years, it's grown dramatically, right? Like 24%. It's very high. And these Latin American countries have kind of put trade barriers in place against Chinese iron and steel as well, in part because their domestic iron and steel industries are really starting to suffer. We are seeing a similar trend for furniture exports from China to Southeast Asia. So this kind of commodities and low value goods will certainly almost be blocked by import tariffs going into the next few years. But important things, right? Important things like Chinese intermediates that feed very much into local production processes will be allowed to enter. So let's say I'm creating something in Vietnam and 20% of my content comes from China. It makes no sense for the Vietnamese government to block that 20% from coming in. So Chinese inputs will very much be allowed to enter. We believe that this is kind of the tariff strategy for the developing world in the next few years. An important thing to note is that attracting Chinese greenfield investment in the developing world is still very much a key goal. I was in Malaysia, actually, I think a couple of weeks ago for a conference on China, and I think trying to attract Chinese investment in developing countries is still very much a priority, is still very much a point of interest for a lot of emerging markets, and that's really because the developing world views China as a long-term structural exporter of capital and of services, with a lot of hopes that Chinese inflow of FDI can drive workforce upskilling, tech transfer, and infrastructure development in these emerging markets. That being said, however, tariff barriers could be designed in a way to compel Chinese investment in local capacity. We've seen this most clearly in Indonesia, where there are tariffs on the pure exports of, I think, iron ores and other metal ores in order to compel investment in local processing capacity. So I think as the developing market tries to figure out its relationship with China, it's really trying to block the inflow of low value goods and commodities, allowing intermediates, but also trying to attract Chinese investment. And what does that mean for all of you, right? For supply chain executives that sit in multinational corporations, we have three points here really to summarize it. Largely, we view that rising global trade barriers will further fragment supply chains. And that means that your first wave of friend-shoring is insufficient to reduce trade risks. In 2018, with the very first 301 tariffs on China, we saw some friend-shoring, or sorry, reshoring happening there. I think we saw a second wave post-pandemic, but these are still insufficient to reduce trade risks, and that's because tariff risks are present and still growing in friend-shoring locations. Supply chain teams have to grapple with two kind of issues, right? You have to grapple with U.S. tariffs and non-tariff barriers on friend-shoring countries that you are now operating in, and secondly, you need to grapple with tariffs from these countries on Chinese final goods, so it's actually becoming very complicated in terms of, I would say, a tariff strategy management perspective. The developing world is also diversifying their trade partners beyond the E.U. and the U.S. They're increasingly looking to each other for free trade investment as barriers in the U.S. and E.U. start to go up, so we could see trade becoming much more regionalized as a possibility in the next couple of years. The last one, I think, we see this in particular industries, right? Clean tech, personal care, FMCG, auto industries. We're starting to see Chinese firms emerge as veritable competitors in these foreign markets. We were speaking to clients, I think, even just two years ago, and they were already starting to see this as an issue. And as I think Chinese firms start to really ramp up their outbound FDI in other markets, this is something to consider as well. And all of these trends for supply chain in the next few years really necessitate a shift in supply chain management. As I've already mentioned, I think daily monitoring of rapid and very unpredictable trade policy changes at the HS6 level. We offer that service through our Trade Regulatory Monitoring Platform, TRM. Of course, feel free to reach out to Nick or to a member of Onyx team if this is something you're interested in. It's also important to start forecasting trade and investment policy direction in those friend-shoring markets. It's no longer enough to look at the U.S., what's coming out of the E.U. It's also important to look at what's coming out of Southeast Asia, out of India, out of Latin America and Eastern Europe. On the longer term, I think exploration of new sourcing and markets that are geographically or geopolitically proximate as trade starts to become, I think, more diverged around regional or geopolitical lines. That's something to take note as well. And a lot of clients ask us, right? So what can we do at this point in time, or how can we prepare for the uncertainty in the next few years? We've mapped out a few corporate responses to rising policy risks in the immediate, medium, and long term, and we've seen this kind of being implemented across some of our clients. In the immediate term, we see, I think, quite a lot of folks pursuing inventory pre-placement, engaging monitoring solutions, as I've mentioned, carrying out initial contingency planning, ensuring quite a robust trade diversion prevention program. This is particularly important for Southeast Asia, I think, and also determining options for government outreach if government affairs is an organization that you're comfortable working with. In the medium term, carrying out N-tier supplier identification data gathering is really important. Some clients that we speak to, I think, are not especially visible about what their N-tier supplier maps actually look like, evaluating warehouse solutions, as well as determining what is company-specific criteria for relocating sourcing. When we assist clients in assessing locations that they want to relocate to, I think company-specific criteria is really important here. In the long term, I think having a sense of policy profiles across different geographies, right, engaging in scenario-based network design through Expeditors Network Solutions team, and really diversifying sourcing as well to reduce exposure to logistical policy and geopolitical shocks. So a lot, a lot of options to take in the immediate, medium, and long term. And I think that's what really Onyx is designed for, to kind of walk you through some of these options. So with that, I think we'll move on to a poll, and I'll hand it over to Nick. All right. Thanks, Olivia. A nice job getting back into the flow there. So I'm going to launch this poll and give you a chance to answer. More simple poll here, just a single answer. And looking for, like, what are you primarily considering in this quote-unquote friend-shoring locations, kind of the typical locations that we've seen companies look at? Five options there. So give it your best shot, your best answer in terms of what really stands out, I think, among all the options. And then next, after this, we'll be turning over to Suryo for our last and final section. Just a reminder, if you have any questions, go ahead and throw those in the Q&A. We should have a little time at the end to get to those. So we'll keep an eye on the Q&A over the next few, you know, five, ten minutes or so there. All right. So last chance, get your response in. We'll give it about another five, ten seconds before we close that out. Okay. Let's end that now. And probably not a surprise, 83% of people are looking at Southeast Asia as a friend-shoring location. I know something Suryo knows a lot about. So feel free to comment on that or go right into your next section there, Suryo. Well, yeah, thanks, Nick. I think that's really interesting, right? So, well, in this section, I'm going to discuss about that. So I think the key question that I want to ask companies here is that, you know, is friend-shoring really de-risking, right? So is friend-shoring to Southeast Asia really de-risking, considering that, you know, those emerging markets, more specifically the friend-shoring countries, are still reliant on Chinese inputs and investment? So can you go to the next slide, Olivia? So Olivia has provided a good, you know, overview over what are, you know, the reason why, you know, countries, friend-shoring countries like Mexico, Vietnam, Malaysia, Thailand, India, Philippines, and Indonesia to still allow the import of intermediate goods from China despite the increasing trade barriers over Chinese goods, right? So yes, I mean, as you can see from the graph on the left, that these countries are really benefiting from friend-shoring, but it's the first wave of friend-shoring, right? So the first wave of friend-shoring is basically when companies move their production capacity, you know, final assembly to these four countries, to these friend-shoring countries. So as you can see, that the export of manufacturing from the friend-shoring countries are increasing by 7% year-over-year. But if you take a look deeper, because this is, as I've said before, because this is the first wave of friend-shoring, which is just the, you know, final assembly has moved to those friend-shoring countries, they still rely on the import of manufacturing intermediates from China. Even though the friend-shoring manufacturing exports grow by 7%, the growth of import, the import of intermediate goods from China also grows by 10% year-over-year. So you can see that Vietnam, in particular, the increase of import manufacturing, intermediates manufacturing goods is increasing quite significantly there, followed by Mexico and India. So this is the overall landscape of the friend-shoring countries' manufacturing exports and its relation with the intermediates import from China. Can you move to the next slide, Olivia? So now companies are thinking about the second wave of friend-shoring, right? So the first wave is just the assembly, the final assembly to the friend-shoring options. Now the second wave, they're looking for local suppliers to feed into their manufacturing facilities in the friend-shoring countries. So now we are seeing the trend that, you know, Chinese companies are starting to move to invest in the friend-shoring countries. See the graph on the left that, you know, Mexico is seeing a huge increase of Chinese FDI manufacturing investment into the country, followed by Vietnam. And then when you take a look deeper into the top six sectors of the Chinese FDI that goes into the friend-shoring options, electronics comes first, especially in Vietnam and Malaysia. And the second one is automotive in Mexico. This follows the trend, this trend of the FDI of Chinese companies moving to these friend-shoring countries is following the larger manufacturers' footprints. Like in Mexico, the majority of multinational companies that move their facilities to Mexico are automotive companies. Hence, the Chinese FDI there is on the automotive intermediate goods to basically provide, to supply intermediate goods to those multinational companies based in Mexico. And the same story with Vietnam, electronic multinational companies moving there so that because of that, Chinese companies producing intermediate goods for electronic products also moving to Vietnam. So yeah, so next slide, Olivia. So all of this trend, right, strong investment flows from both the Western countries like the U.S. and the European the E.U. countries, as well as Chinese investment. They basically create some kind of strong investment influx to the friend-shoring countries. But more specifically, we are seeing that rising investment in Southeast Asia five countries, namely, you know, Indonesia, Philippines, Malaysia, Thailand, and Vietnam, may create some kind of tight labor markets. So here we analyze the correlation between labor markets, more specifically the unemployment rate and capacity. And we found that, you know, a tight labor market may lead to some kind of capacity constraint. So let me explain a little bit about the graph. So the y-axis is the unemployment rate. And the dashed line here is the neutral rate that represents the lowest level of unemployment that can occur in the economy before the labor market becomes tight and, you know, stoking inflation to go higher. And the blue line, the solid blue line, is our baseline unemployment without any kind of increasing investment to the countries. And the red line is the unemployment rate with the status quo investment scenario. And the pink line is the unemployment rate with the high investment scenario. So it's about 8%-10% higher than the red line. So when the solid lines, the blue, red, and pink lines fall below the dashed line or the neutral rate, it means jobs are abundant, right? Because the number of investment inflows is really strong. So it creates more jobs. And these jobs are basically exceeding the labor supply, which makes companies compete for labor. And this drives the labor cost up and creates capacity constraint. And at the end, because the labor cost is going up, it also increases the inflation rate. So I want to highlight three countries at the bottom here, Malaysia, Thailand, and Vietnam. More specifically, Malaysia and Vietnam are under risk of having a tight labor market in the future. So, you know, when companies are considering moving or diversifying their supply chain from China or from other countries to Malaysia and Vietnam, they should take a look as well. They should take a look at the labor market condition in Malaysia and Vietnam as well because it's getting tighter. Next slide, Olivia. So Olivia has already talked about the trade landscape and also on how the U.S. trade relationship with the friend-shoring countries. So the current trade landscape, we foresee that it may encourage the friend-shoring countries to reduce reliance on China. How they can, how can they do it? So it's by fostering local suppliers of intermediate goods, right? So now companies are on the second wave of friend-shoring activities right now. So they're looking for local suppliers. So now instead of, yes, in the short term, those countries are still receiving, you know, investments, FDI from China. But in the medium to long term, they are looking for nurturing their own domestic companies to actually supply the multinational companies that are investing in their own countries. So most of the countries are championing some kind of supportive policies here with the exception of Indonesia. So Indonesia is quite unique. Its approach is quite unique. So it's enforcing local content requirements that basically incentivize foreign companies to partner with local suppliers. And in the end, it can foster domestic intermediate goods industries. So I think the case right now is with Apple. So Apple cannot sell in Indonesia unless it partners with local industries and builds a factory in Indonesia. So that kind of thing is, that kind of policy is quite different compared to the other countries. And besides the nurturing the local suppliers or local companies, all of these countries are also doing industry specialization. So they are planning, these countries are planning to develop the local industries, but focusing on a specific specialized industries. For example, like Malaysia, electronic and semiconductor, Thailand, automotive and machinery. Vietnam is electronics, it's the same. India is electronics, automotive and pharmaceuticals, and Mexico is automotive because it's the strongest sector in the country. So these are basically the approach that the friend-shoring countries are looking forward to in the future to basically nurture development of their local companies to supply intermediate goods to the multinational companies based in their own respective countries. Thank you, Nick. Back to you. Yeah, thanks, Suryo. We had a couple of questions that just came in. The last one was about any insights on Cambodia, kind of on that last slide that you were on. I know I've talked to a couple of companies, more kind of retailing apparel industry there, but that's very surface level. I know like any insights you have in terms of where does Cambodia sort of fit among those other countries that you had listed there? Yeah, Cambodia is, well, the state of development in Cambodia with respect to skilled labor, right, so yeah, of course, the skilled labor is not, the quality of the skilled labor is not as high as Malaysia, Vietnam, and Thailand, and Indonesia. So hence, you know, a lot of industries, a lot of manufacturers, a lot of manufacturing companies are moving there that are basically like low-level manufacturing, like basic manufacturing, right? Like textile industry, for example, and also Cambodia is experiencing a severe tight labor market as well right now, so they're trying to shift their labor force from agriculture to manufacturing. But still, you know, we foresee that it might not be enough to cater all of the investments that are flowing to Cambodia. Understood. Okay, great. Thank you. And then also on the slide, maybe Olivia, if you could go back to the slide with the tight labor markets. There was a question if you have a sense, Suryo, where India fits. I think it was, go forward. Yeah, that one right there. Putting you on the spot a little bit, but like any sort of maybe qualitative general sense of where India might fit here. Yeah, India's labor force is huge. So I mean, just a comparison here. Vietnam's labor force is about 57, 56 million. But India's labor force is 500 million people. So I mean, the difference is quite staggering, right? I mean, long story short, that India in the short to medium term is not going to have a tight labor market problem like Vietnam and Malaysia. But they have their own set of problems as well. I'm talking about policy landscape and political landscape. Political dynamic, political landscape is really dynamic in India. And regulation is quite complex. That's usually what our clients are thinking about when they want to move to India compared to Vietnam, let's say. Okay, great. Then there was one last question about how likely is Trump to follow through with his threat of tariffs on Mexico and Canada. We don't really know. We don't unfortunately have that kind of foresight. I think generally we kind of hold that as what will probably happen unless we hear otherwise. That's the deadline in early March. I think it's like March 4th, around there. That's what we're expecting unless we hear otherwise. All right. I think we're at time here. Thank you all. Just a reminder, if you'd like to get a copy of the slides and the recording, look for a survey here in the next couple of hours. We'd love to hear your feedback, but also your way to get the materials. Thank you for attending. Thank you, Olivia, and thank you, Suryo, for the great presentation today. Thank you, everyone. Thank you, everyone. Thank.