Mission for stronger standards is reshaping supply chains

As global supply chains evolve, low-cost manufacturing is giving way to transparency, traceability, and international standards. Dr. Jackson Woo, managing director of SGS Vietnam, spoke with VIR’s Phuong Thu about how the standards race is reshaping global supply chains.

- Phuong Thu

What will determine a country’s position in global supply chains in the coming years: production cost advantages or the ability to comply with international standards?

In the coming years, the ability to meet international standards will increasingly determine a country’s role in global supply chains. Low production cost alone is no longer a guarantee of success. While cost competitiveness remains important especially for basic manufacturing, global buyers are now prioritising environmental, social, and governance (ESG) compliance, traceability, and data transparency when choosing suppliers or investment destinations.

For high-value sectors and critical supply chains, buyers are willing to pay a bit more for assurance that products meet rigorous quality and sustainability criteria.

Countries that invest in robust standards infrastructure and enforcement ensuring their exporters can meet ISO certifications, environmental regulations, and ethical sourcing requirements will position themselves as trusted links in the chain, which can outweigh pure cost advantages.

On the other hand, countries that rely solely on low costs but fall short on ESG and transparency may find themselves bypassed, as buyers shift orders to places that can guarantee compliance. Ultimately, a competitive cost base remains necessary, but the differentiator will be trust and verification of a nation’s proven capacity to consistently meet global standards.

Has compliance now become a competitive advantage and a prerequisite for maintaining export orders and attracting high-quality foreign direct investment (FDI)?