LONG VIEW: Japan, not South East Asia, the main beneficiary of China's supply chain disruptions?
Supply chains. They’re moving out of China. How much, when, and where to is the question. This is a developing story, but we try to put some numbers on it.
Some background reading:
The Economist: Global firms are eyeing Asian alternatives to Chinese manufacturing: Can “Altasia” steal China’s thunder?
Japan paying companies to move out of China: Japan PM’s Office, The Washington Post, Vietnam Investment Review
*This is not investment advice, do your own research.
SEC Filings: Country Trends
SEC Filings: Yearly Change in Count
Data Files (.xslx)
1. SEC Filings: Country Trends
We again parse SEC 10-K filings for 2006-2022, this time looking for country keywords within the Business Description (Item 1) and Risk Section (Item 1A) of each of the approximately 8,000 listed companies. For a more detailed reading on data sources and methods, refer to our previous post here.
Mentions of China in company filings jumped from 2k to 3k following Covid, presumably in response to the dislocations zero-Covid had on supply chains. That’s around 37% of companies in the US that mention China. For an analysis on corporate exposure to China by industry, see our previous post here.
Mentions of Taiwan may have a lot to do with the “Silicon Shield” and increasing political tensions around semiconductors (see previous posts here and here that build on this idea to make a more sophisticated Taiwan Tensions Index).
As for the other countries from the region, theoretically, mentions may mean anything. However, the fact that Altasia country names appear in the business and risk sections of US listed company filings — at a time when the supply chain shifts narrative is taking place — makes us think that indeed it may be about supply chains. That’s our working assumption.
2. SEC Filings: Yearly Change in Count
Here’s the same data but presented differently. Instead of absolute count values, we take the year-on-year difference in counts. Notice that these numbers can be negative. We then stack these.
Clearly, 2010 to 2022 were choppy for Altasian countries. At the very least, it shows not much change in mentions. But come Covid, we have a spike for an aggregate change of 1,888 more companies mentioning Altasian countries (2020+2021+2022).
But here’s the kicker. Unlike the current supply chain narrative of companies moving predominantly to South East Asia or India (personal impression), the largest beneficiary of the increased mentions is… Japan. Make of that what you will.
For the year-on-year change in mentions count 2022 versus 2019:
738 companies for Japan
499 companies for South East Asia (of which 173 for Singapore)
337 companies for India
163 companies for South Korea
Some back-of-the-envelope calculations for differences in magnitude:
Japan / SE Asia = x1.48 difference in magnitude
Japan / (SE Asia - Singapore) = x2.26 difference in magnitude
Japan / India = x2.18 difference in magnitude
Remember, these are US exchange-listed company counts only.
For details on which countries are mentioned in which company’s filings, we refer our readers to the Excel files with the data towards the end of this post. Thank you for reading.
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3. Data Files (.xlsx)
All data used to make the charts in this issue is included below for premium subscribers. The raw data file with 176,477 rows (i.e. each 10-K submission) is also included. Each company comes with a CIK number and tagged with SIC industry code were available. Individual counts for each of the 14 Altasia countries included. As always, thank you for your support!
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