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Beyond China: Southeast Asia’s Moment in The Global Supply Chain Reset

The region’s role in global manufacturing is shifting as companies look to shore up their supply chains in response to geopolitical uncertainty, tariff realignments and inflation. Many firms are adopting a “China + 1” strategy to reduce overdependence on Chinese manufacturing while capitalizing on the growing industrial capabilities of countries like Vietnam, Indonesia and Thailand. Businesses are spreading risk by building capacity elsewhere without completely abandoning China.

At the same time, regional trade agreements are making ASEAN markets more attractive for industrial investment. The Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are helping reduce trade barriers and simplify regulatory pathways, encouraging manufacturers to localize operations and explore automation. These developments align with broader government efforts to accelerate digitalization and increase regional self-reliance.

This transformation is driving demand for smarter, faster and more resilient manufacturing systems. In the Asia Pacific region, 94 per cent of manufacturers have already adopted or plan to adopt AI and machine learning, with quality control, cybersecurity and process optimization emerging as the top use cases. These tools are enabling factories to manage disruptions more effectively while improving real-time decision-making.

However, progress is not without challenges. A growing industrial skills gap continues to pressure productivity despite slight improvements. Digital literacy remains uneven across markets and verticals, prompting businesses to invest in simulation tools, cloud-based control systems and retraining programs to futureproof their workforces.

As manufacturers in Southeast Asia recalibrate operations for speed, resilience and efficiency, the convergence of trade policy, automation technology and workforce transformation is shaping a new industrial era for the region.

To better understand the region’s role in the global supply chain and if this is a moment to capitalize on, we speak to Marcelo Tarkieltaub, Regional Director, Southeast Asia, Rockwell Automation.

With escalating trade tensions and diverse tariffs reshaping global supply chains, how does Rockwell Automation help Southeast Asian manufacturers navigate shifting priorities, balancing cost, resilience, and speed as companies diversify away from China?

Rockwell Automation’s recently released 10th annual State of Smart Manufacturing Report highlights a number of challenges manufacturers face. Externally, inflation, supply chain disruptions, and rising cybersecurity threats top the list. Internally, budget constraints, skills shortages, and integrating new technologies are major hurdles.

To tackle external pressures like supply chain disruptions and cybersecurity risks, Rockwell Automation offers AI-driven tools for quality control, process optimization, and risk management — enabling faster, data-informed decisions and operational agility. Internally, we support companies through scalable, secure edge-to-cloud architectures and consulting services that simplify technology integration.

At the same time, Rockwell emphasizes talent transformation — helping manufacturers upskill existing workers, fill digital skills gaps, and shift employees into higher-value roles. This combined approach strengthens both operational resilience and long-term competitiveness.

In terms of the comment that companies are “diversifying away from China”, we don’t see it that way. Our experience is that many companies are diversifying their supply chains with a “China +1” strategy. This means they are maintaining their operations in China while adding new capacity in other markets. Spreading risk in this way is smart business regardless of any prevailing geopolitical situation.

As blended non‑US trade agreements and regional initiatives emerge, to what extent do these frameworks influence your clients’ decisions around localization, automation investments, or capital deployment in Southeast Asia?

Businesses in Southeast Asia weigh investment, localization, and automation together when responding to shifting trade dynamics.

Trade agreements like the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) create a conducive environment for Southeast Asia-based manufacturers in a regional and global economy.

Rockwell Automation’s localized presence and partner ecosystem in key Southeast Asian markets allow us to support this shift, offering automation and digital transformation solutions that align with the region’s economies. Manufacturers are doubling down on smart technologies not only to meet compliance and competitiveness goals, but also to build long-term operational resilience.

Quality control remains the leading AI use case at ~47% of firms in APAC, followed closely by cybersecurity and process optimization. Could you share real-world examples of manufacturers embedding ML into production lines for both efficiency and predictive decision‑making?

At Rockwell Automation, we’re seeing strong momentum for embedding machine learning (ML) directly into production environments to enhance quality, consistency, and predictive decision-making.

According to our latest State of Smart Manufacturing report, 47% of APAC manufacturers ranked quality control as the top AI use case, followed by cybersecurity (44%) and process optimization (43%). Globally, the trend is similar, with 50% of manufacturers applying AI/ML to product quality — the leading use case for the second consecutive year.

A practical example of this progression is Pharbaco, a leading pharmaceutical manufacturer in Vietnam. Facing rigorous international compliance demands and aiming to boost production efficiency, Pharbaco partnered with Rockwell Automation and its local OEM, Qui Long, to implement a smart manufacturing solution. By integrating AI-enabled HVAC automation, continuous environmental monitoring, and IT/OT convergence using FactoryTalk software and Logix controllers, Pharbaco achieved:

Over 45% reduction in energy consumption
Enhanced compliance via automated data reporting
Improved process control and cleanroom efficiency

Pharbaco’s success illustrates how embedding AI-driven intelligence into multiple layers of operations—from building systems to production lines—can deliver measurable results while supporting long-term scalability. This example underscores that strategic, enterprise-wide AI adoption is key to transforming optimization efforts into sustainable competitive differentiation.

While the skills gap narrowed marginally from 31% to 29% in 2025, challenges persist. How are your clients investing in workforce transformation and digital literacy alongside automation? And how are AI and digital platforms helping existing teams manage higher-level tasks?

Our global 2025 State of Smart Manufacturing Report shows that while the talent gap is narrowing, companies are still under pressure to build digitally fluent teams.

We see workforce transformation as one of the key imperatives for industrial resilience. While the skills gap remains a pressing issue, manufacturers across the Asia Pacific are making clear moves to address it by augmenting human capabilities with smart systems. In the Asia Pacific, 46% of businesses believe AI and ML can directly help address workforce shortages, and 42% are investing in technology to create more engaging roles.

We offer solutions like Emulate3D™, which enables teams to simulate manufacturing environments virtually before deploying them in real-world settings. Similarly, platforms such as FactoryTalk® Design Studio™ and FactoryTalk® Optix™ empower cross-functional teams to co-develop automation systems via the cloud, improving collaboration and reducing design cycle time.

You’ve described the path from digital transformation to autonomous manufacturing systems capable of self‑decision making and predictive analytics. What maturity thresholds must plants cross to reach true autonomy, and how is Rockwell guiding clients along this journey?

Rockwell Automation helps clients move from digital transformation to autonomous manufacturing with a step-by-step approach.

The path from digital transformation to autonomous manufacturing begins with identifying high-value use cases and building a business case, then establishing an enterprise-level OT/IT architecture to connect and contextualize data.

Next is implementing minimum viable products (MVPs) that deliver full-stack capabilities on specific assets or lines, adding new MVPs every 90–100 days to create a scalable foundation.

As solutions are scaled across assets, lines, and plants—and refined with plant-specific rules—operations progress toward continuous optimization, where integrated AI/ML, secure data flows, and closed-loop control enable systems to make self-directed, real-time decisions.

What is your strategic vision for Rockwell Automation’s next wave of growth in Southeast Asia? Which markets and verticals are most promising, and why?

Southeast Asia remains one of Rockwell Automation’s most promising regions for growth, driven by government-led digital transformation initiatives, strategic manufacturing relocations, and a young, adaptable workforce. We see strong momentum in Vietnam, Indonesia, and Thailand, where demand for localized smart manufacturing solutions is accelerating across verticals.

With a strategic focus on key Southeast Asian industries like life sciences, semiconductors, water/wastewater, oil and gas, food and beverage (F&B) and consumer packaged goods (CPG), Rockwell Automation is playing a pivotal role in Singapore and Southeast Asia’s smart manufacturing evolution. Our vision is to continue empowering these markets with intelligent, secure, and scalable automation systems that drive long-term value across their operations.

Originally published on Tech Collective SEA

Marcelo Tarkieltaub

Regional Director, Southeast Asia, Rockwell Automation

Based in Singapore, Tarkieltaub is responsible for sales and business operations across Singapore, Malaysia, Indonesia, Philippines, Thailand, Pakistan and Vietnam. Prior to Southeast Asia, Marcelo was Regional Director, Southern Cone, a portfolio within the Latin America region covering the markets of Argentina, Chile, Peru, Paraguay, Uruguay and Bolivia. He has over 20 years of experience at Rockwell Automation and possesses deep knowledge of driving high performance teamwork in multicultural environments. Marcelo holds an MBA from Fundação Getulio Vargas and Bachelor of Science, Electrical Engineering from Universidade de São Paulo. Marcelo is fluent in English, Spanish, Portuguese.