New Alliance Moves the Needle on Latam-Asia Relationship
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New Alliance Moves the Needle on Latam-Asia Relationship

Photo by:   Francisco Ríos
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By Francisco Ríos - Enterprise Singapore
Regional Group Director (Latin America)


Since early 2020, when the world was impacted by the global pandemic and learned to react, adapt and understand how to deal with it, we have seen one example after another of the fragility of the global supply chain as we know it. The once absolute conviction that globalization was everlasting and the only way to find efficiency in our manufacturing processes is increasingly challenged.

We have seen how disruption and shortage of products and their resulting effect on prices can be caused by smaller events, such as a ship stuck in the Suez Canal, localized decisions like a factory enforcing social distancing, country-level policy changes like temporary trade restrictions or impactful political positions like the trade tensions between the US and China. The truth of the matter is that countries and companies need to make their processes more efficient and their networks more resilient and diversified to cope with current and future challenges.

Facebook’s new focus on developing a MetaLife has certainly caught the interest of our collective imagination and fully synced with our “life as we know it” (for almost two years now) where everything happens from the comfort of our house, inside an electronic box, connected with the world through a wire. However, we run the risk of forgetting that to be able to create our virtual self, we need to fulfil our basic and not-so-basic needs in the physical world; therefore, supply chains, availability of products and connectivity need to continue to improve.

Today, it is increasingly important to identify and strengthen strategic relationships with partners that can help us navigate and develop new areas of business and create future differentials. It is with that intent that we have concluded negotiations and will be signing the new Pacific Alliance-Singapore Free Trade Agreement (PASFTA), the first of such agreements negotiated with common terms by the Latin American bloc and the result of four years of talks. The agreement is both unique and forward-looking and, once ratified, Singapore will become the first associate member of the Pacific Alliance, offering companies from Mexico, Colombia, Chile and Peru a preferential gateway to Asia.

Beyond offering an alternative to making a US-China binary choice, a tighter link with Singapore can offer Mexico and Mexican companies a window to understand the developments, innovation and technologies surfacing in Asia. This will become increasingly relevant for manufacturing, as companies in Southeast Asia are quickly developing Industry 4.0 solutions that increase efficiency, lower costs and dramatically improve productivity in processes for the automotive, aerospace, medical technologies and electronics industries, areas of great commonality between Southeast Asia and Mexico.

One of the most evident challenges for the manufacturing industry has been the over-reliance on on-site activities, which has proven to be a sore spot in the face of economic lockdowns generated by the COVID-19 pandemic. Today, the importance of Smart Remote Monitoring and Diagnostics Solutions is increasingly clear. They allow companies to:

  1. Prepare for the future – Equipping companies with tools that could prove to be effective in the next lockdown, social distancing or COVID-like situation while being able to meet their immediate needs.
  2. Fulfill increasingly stringent customer requirements – As OEMs and Tier1 companies begin to diversify and regionalize their supply chain, they will also include requirements that ensure continuity of operations of certified suppliers when facing outstanding events.
  3. Increase long-term productivity – Solutions that minimize or eliminate unnecessary site visits, reduce expensive equipment damage and reduce power waste will increase overall factory productivity and allow the suppliers to have better margins and offer more competitive conditions.

In a recent trip to Guanajuato, I was pleased to meet with Idea GTO and iClusters, an initiative that looks to bring innovation, entrepreneurship and technology to the forefront by helping clusters of manufacturing companies understand their challenges, formulate their problem statements and collaborate to find solutions. We are happy to work with them and other important manufacturing states to help companies find their counterpart in Singapore that can jointly develop solutions to improve our processes, connectivity and increase our resilience together.

These are just some of the areas of collaboration we think are crucial to overcome the challenges of the years to come. By looking to each other, Latin America and Southeast Asia can increasingly find commonalities that will help us leverage each other’s experiences and develop joint solutions that can work in our respective regions.

Francisco J. Rios is Regional Group Director for Latin America at Enterprise Singapore, where he champions enterprise development and the internationalization of Singapore-based businesses in Latin America.

Photo by:   Francisco Ríos

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