Building resilient supply chains in SEA with GEODIS compliance expertise
19 May 20256 min read
Summary
- Heightened geopolitical tensions, regulatory shifts, and supply chain disruptions have made global trade more volatile, exposing companies to greater compliance and operational risks.
- Many firms face penalties and delays due to outdated manual processes; Dr KC Chang of GEODIS advises implementing Internal Compliance Programs (ICP) with automated tracking, audits, and employee training to strengthen oversight.
- Leveraging Free Trade Agreements like RCEP and ATIGA, alongside tailored compliance systems and digital trade tools, can help Southeast Asian companies enhance efficiency, reduce costs, and navigate diverse regulations.
Alarm bells went off in 2024 when Singapore unexpectedly emerged as Nvidia’s second-largest revenue source, raising serious questions about the global trade of sensitive technology. This fueled speculation that Nvidia’s AI chips were being channeled to China, despite U.S. export restrictions.
These concerns intensified when China’s DeepSeek turned eyes in the international AI scene, powered by Nvidia GPUs. These chips that were never supposed to end up in China. Singapore has since been working to dismantle these shadow network trafficking high-tech components.
As scrutiny tightens, the Nvidia-Singapore case highlights how trade compliance lapses can trigger geopolitical tensions, corporate fallout, and billions in market value losses overnight. With Nvidia’s shares tumbling and governments under pressure to enforce export controls. In today's evolving global economy, companies engaged in international trade face multiple challenges. Geopolitical issues, new regulatory compliance standards, technological trade barriers, and protectionist measures have made trade more complex than ever.
Value Chain Asia speaks to Dr KC Chang, Regional Director of Customs Brokerage & Trade Compliance, for Asia Pacific and Middle East at logistics firm GEODIS, about logistics firm GEODIS about how businesses can navigate these challenges, implement structured compliance frameworks, and leverage Free Trade Agreements (FTAs) to optimize their supply chain operations.
Navigating Complex Trade Environments: Insights from GEODIS
According to Dr Chang, global companies today grapple with key trade-related issues which create significant barriers for businesses. This is particularly important for those trying to ensure efficiency and compliance in their international trade operations.
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“Geopolitical challenges such as U.S.-China trade tensions, Middle East conflicts, and the Ukraine-Russia war lead to tariffs, sanctions, and unpredictable policy shifts. It is imperative for companies to navigate changing regulations with complex restrictions when conducting cross-border supply chain activities.”
In addition to geopolitical risks, supply chain disruptions have become more common. This has led to many companies experiencing rising shipping costs, delays in receiving critical raw materials, and shortages of key components.
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“In recent years, we have all learned that challenges such as COVID-19, natural disasters, labor actions, and geopolitical conflicts have the potential to expose vulnerabilities in global supply chains. Many companies have experienced long delays in shipping, rising transportation costs, and shortages of critical components creating production disruptions in manufacturing plants.”
Regulatory compliance is another major issue, as countries around the world continue to tighten trade restrictions and increase enforcement measures.
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“With rising tensions between major powers around the world, there is an increasing focus on regulatory compliance and enforcement from governments. Complying with local laws such as export control, data protection, or cybersecurity regulations requires significant investment in legal and compliance teams for all companies.”
Addressing Compliance Gaps and Implementing Effective Frameworks
Dr Chang says that many companies struggle with customs and trade compliance due to gaps in expertise, outdated processes, and shifting regulations. These gaps often lead to inefficiencies, increased costs, and even legal risks for these companies seeking market share in the international scale.
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“A major issue is the lack of knowledge and training. Employees handling customs and trade compliance often lack professional expertise in global regulations, leading to costly errors, delays, or penalties. Some companies also rely on manual processes and outdated technology, making it difficult to track trade data, classify goods correctly, and ensure compliance with ever-changing trade laws.”
Dr Chang recommends adopting a structured Internal Compliance Program (ICP), a framework originally designed for export control management but now widely applicable to all aspects of customs and trade compliance. This is to address issues such as financial penalties, supply chain disruptions, and reputational damage.
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“An ICP is a set of internal procedures and controls that a company can implement to ensure adherence to export control laws and regulations. Essentially, this acts as a self-monitoring system to guarantee that their exports comply with legal requirements regarding the trade of controlled goods and technologies.”
By incorporating automated systems, conducting regular audits, and providing specialized compliance training, companies can reduce these risks. According to Dr Chang, having a well-defined ICP ensures that businesses stay compliant with evolving trade regulations while improving efficiency in their operations.
Real-World Impacts of Compliance Frameworks
A structured compliance program can result in cost savings and improved supply chain efficiency. For example, Free Trade Agreements (FTAs) offer companies gateways to reduce costs and expand into new markets if leveraged correctly.
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“By proactively leveraging Free Trade Agreements, companies can significantly reduce costs, improve global competitiveness, and expand into new markets with fewer trade barriers. The first step is to conduct a detailed analysis of relevant FTAs that apply to their trade lanes, identifying tariff reductions, preferential duty rates, and regulatory benefits for their products in different markets.”
However, failure to comply with trade regulations can lead to severe consequences. This includes financial penalties, legal action, and restrictions on market access. Dr Chang notes that companies that utilize ICPs can mitigate these risks by taking immediate corrective action when issues arise.
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“If a regulatory non-compliance issue is identified during an internal audit, the company must take immediate and strategic actions to mitigate risks and prevent future violations. This includes assessing the severity of the problem, conducting a thorough investigation, amending incorrect documentation, and communicating with customs or relevant government agencies.”
The SEA Question: Applying Compliance Systems to Southeast Asia
Southeast Asia presents a unique challenge due to its diverse economic landscape and regulatory environments.
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“Countries like Singapore, Malaysia, Thailand, and Vietnam offer strategic advantages, including access to major shipping routes, strong free trade agreements (FTAs), and business-friendly policies.” Companies relocating their regional distribution centers to SEA must conduct thorough market analyses to identify optimal locations. Especially based on factors such as infrastructure, tax incentives, and trade agreements.
Leveraging agreements such as the Regional Comprehensive Economic Partnership (RCEP) and ASEAN Trade in Goods Agreement (ATIGA) can help companies optimize tariff advantages and streamline their operations.
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“Regulatory compliance is another critical factor; companies must understand customs procedures, tax structures, and related import/export trade regulations in their chosen country to avoid disruptions.”
As regulatory environments continue to evolve, companies operating in Southeast Asia must remain proactive in their compliance efforts. Investing in expertise, digital trade management tools, and structured ICPs will be critical in ensuring smooth trade operations.
For young professionals aspiring to enter the field of customs and trade compliance, Dr Chang highlights the growing importance of this role in today’s global trade landscape.
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“Many companies are investing heavily in setting up dedicated teams globally to focus on achieving 100% regulatory compliance in their day-to-day supply chain operations.”
By embracing technology, training, and strategic compliance measures, SEA companies can navigate the complexities of global trade with confidence, ensuring long-term success in an increasingly regulated world.