April 2025’s Liberation Day tariffs by the United States was a tipping point for the global economy. Before these tariffs, existing disruptions including intensifying US-China trade tensions, the ongoing war between Russia and Ukraine, Cambodia-Myanmar tension, and escalating unrests in the Middle East were already reshaping the geopolitical and economic landscape.
Collectively, these developments have ushered in a new norm – one in which the old rules no longer apply.
Asian companies are facing a unique confluence of pressures – rising operating costs, a tight labour market, and the relentless pace of digitalisation. These are daily realities that impact the bottom line and disrupt established norms. Over the past few months, businesses across the region have been grappling with the implications of these disruptions, particularly in relation to their supply chains, investment strategies, and financial performance.
Key impacts on Asian businesses
The current business climate presents a new set of challenges that require a strategic rethink:
1. Investment hesitation
Uncertainty surrounding tariff policies and geopolitical risks has led many firms to postpone, scale back, or reconfigure their investment decisions. The lack of clarity on future trade regulations has made long-term planning increasingly difficult, prompting a more cautious approach to operating costs, capital expenditure, and growth initiatives. This has not only created operational bottlenecks but also stunted long-term business growth trajectory.
2. Supply chain reconfiguration
The global ecosystem is increasingly connected, with international supply chains deeply intertwined. Disruptions in one part of the world can have multi-faceted ripple effects, leading to production delays, increased costs for raw materials, and operational inefficiencies. Companies face a strategic crossroads: rely on traditional business models or embrace the new norm and innovate. This has triggered a wave of strategic reviews, with many exploring nearshoring, diversification of suppliers, and increased inventory buffers.
3. Operational disruptions
Shipping delays, increased logistics costs, and challenges in sourcing critical components – especially those reliant on cross-border trade – have become commonplace. These disruptions are forcing companies to rethink their operational models and build greater resilience into their supply chains.
4. Embracing digitalisation for the competitive edge
In response to volatility, some businesses are accelerating digital transformation and automation initiatives. It is not merely about introducing the latest technologies but a total reassessment of how to leverage, derive value, and harness change throughout business processes. These efforts aim to reduce dependency on vulnerable supply chains and improve operational efficiency in an increasingly unpredictable environment.
5. Talent and workforce implications
Margin compression and shifting operational priorities have led to workforce restructuring across multiple sectors. Where feasible, talent redeployment for the existing workforce is an easy fix. However, in situations where skills and required demands are mismatched, redundancy becomes inevitable. In terms of talent attraction, companies must continuously develop compelling value propositions to attract the right candidates and ensure business longevity.
SMEs: A higher vulnerability
Amidst global volatility, strategy is not only a luxury for larger businesses. SMEs face heightened vulnerability, making a proactive response vital for survival and sustainable growth. Operating with thinner financial buffers, limited diversification, and fewer resources to adapt, many SMEs have traditionally relied on familiar frameworks and long-standing supplier relationships that have sustained them for years. The current uncertainty has disrupted these norms, pushing business owners into unfamiliar territory and forcing a fundamental rethink of their operating models.
Navigating the new norm can be daunting. Many SME leaders are actively searching for ways to ride the wave – reassessing their strategies, seeking external guidance, and exploring new partnerships to remain competitive in a rapidly changing landscape.
How SMEs can exploit this situation to reposition themselves
While global disruptions pose significant challenges, they also create opportunities for agile SMEs to differentiate and thrive. Unlike large corporations, SMEs can pivot faster, experiment with new models, and capitalize on emerging trends. Here’s how SMEs can turn adversity into advantage:
- Leverage agility for market entry: SMEs can exploit gaps created by supply chain disruptions to enter new markets or offer niche solutions. Businesses that can source locally or provide faster turnaround times will gain a competitive edge over larger, slower-moving competitors.
- Position as trusted partners: In times of uncertainty, reliability becomes a premium. SMEs can strengthen relationships by emphasizing transparency, responsiveness, and personalised service – qualities that big corporations often struggle to deliver at scale.
- Tap into regionalisation trends: With nearshoring and regional supply chains gaining traction, SMEs can position themselves as local champions. This not only reduces dependency on volatile global networks but also aligns with governments’ push for economic resilience.
How SMEs can navigate these challenges
To survive and thrive in the new norm, SMEs need a proactive, strategic approach:
- Diversify supply chains: Avoid over-reliance on a single supplier or geography. Explore multi-sourcing strategies, regional partnerships, and digital procurement platforms to build resilience.
- Accelerate digital transformation: Invest in affordable digital tools – cloud solutions, e-commerce platforms, and automation – to streamline operations and reduce costs. digitalisation is no longer optional; it’s a survival imperative.
- Strengthen financial resilience: Build cash buffers, renegotiate credit terms, and explore alternative financing options such as government grants or fintech lending platforms to weather volatility.
- Upskill and reskill workforce: Focus on training employees for digital roles and flexible work arrangements. SMEs that invest in talent adaptability will outperform those that rely on outdated skillsets.
- Collaborate and form alliances: Strategic partnerships – whether with other SMEs, industry associations, or tech providers – can unlock shared resources, reduce costs, and open new revenue streams.
How good business strategies can enhance competitiveness
In times of uncertainty, robust business strategies are not just defensive measures – they are competitive differentiators. A well-crafted strategy enables SMEs to:
- Anticipate and adapt to market shifts: By continuously scanning the environment and adjusting plans, SMEs can stay ahead of disruptions rather than react to them.
- Create value beyond price: Strategic positioning around quality, reliability, and innovation allows SMEs to compete on more than cost, building stronger customer loyalty.
- Optimise resource allocation: Effective strategies prioritise investments in areas that deliver the highest impact – such as technology, talent, and customer experience – ensuring sustainable growth.
- Build organisational resilience: A clear roadmap for risk management, diversification, and contingency planning equips SMEs to withstand shocks and recover faster.
Ultimately, good strategies transform uncertainty into opportunity, enabling SMEs to not only survive but thrive in the new norm.
Conclusion: Turning disruption into opportunity
The new norm is here to stay. For SMEs, survival depends on agility, innovation, and resilience. Those that embrace digitalisation, diversify supply chains, and invest in talent will not only weather the storm but emerge stronger and more competitive. In a world where uncertainty is the only certainty, SMEs that act boldly today will define the success stories of tomorrow.
How we can help
At Grant Thornton Singapore, we understand the unique challenges SMEs face in times of disruption. We work closely with business owners to provide pragmatic, forward-looking solutions that help businesses not only survive but thrive in uncertain environments.
We offer support across several critical areas, including business model reassessment to help SMEs pivot and build operational resilience, scenario planning and strategic roadmapping to enable informed decision-making in volatile conditions, financial resilience and cost optimisation through cash flow forecasting and cost structure reviews, and leadership and change management to empower business leaders in driving transformation confidently.
Our approach is collaborative and tailored to each business’s unique context. With deep regional insights and global expertise, we are committed to helping SMEs build clarity, capability, and confidence in a rapidly evolving world.
