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Middle East businesses strengthen resilience through supply chain diversification amid geopolitical changes
Survey reveals shifting strategies, supply chain diversification, and Korean firms’ growing influence
- PUBLISHED: Thu 27 Feb 2025, 10:25 AM
As regional uncertainties persist, businesses across the Middle East are actively reshaping their operational strategies to ensure growth and continuity. A recent survey conducted by the Korea International Trade Association (KITA) UAE Center in January 2025 reveals that 60 per cent of local and multinational companies in the region have adapted their business strategies in response to geopolitical factors.
The survey, which included 120 companies, found that 35 per cent reported a moderate impact on their operations, leading to refinements in existing processes. Additionally, 18.3 per cent faced significant strategic shifts, while 6.7 per cent underwent profound restructuring. Companies cited increased operational costs (56.7 per cent), project delays (41.7 per cent), and supplier instability (38.3 per cent) as key challenges, prompting proactive risk mitigation efforts.
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To counter potential disruptions, businesses are increasingly focusing on supply chain diversification. The survey results show that 54.2 per cent of companies are securing multiple suppliers across different locations to create redundancy and ensure operational stability. Additionally, 52.5 per cent have reinforced their contractual agreements with suppliers, while 45.8 per cent have developed alternative shipping routes to reduce logistical delays. Moreover, 38.3 per cent are leveraging digital tracking and forecasting tools to enhance operational agility and responsiveness.
The study also underscores the competitive edge of Korean companies in the region, known for their high-quality products and innovation. Those who have engaged with Korean businesses rate them highly — scoring 4.0 out of 5.0 for quality and 3.9 for innovation. In terms of risk resilience, logistics infrastructure, and cost competitiveness, Korean firms scored 3.5, 3.4, and 3.3, respectively. Efforts by government bodies and industry associations are ongoing to raise awareness and strengthen business collaborations.
Dubai remains the top choice for business operations in the Middle East, with 84.2 per cent of respondents selecting it as their preferred hub, followed by Riyadh (63.3 per cent) and Abu Dhabi (42.5 per cent). Business-friendly policies and regulations were cited by 65.8 per cent of companies as the primary factor influencing their choice of location, highlighting the pivotal role of government initiatives in fostering a stable and thriving economic environment.
Park Phil-Jae, president of KITA UAE, commented: “Our research confirms that despite geopolitical uncertainties, businesses are taking proactive steps to strengthen their supply chains and drive innovation. KITA UAE remains committed to raising awareness about the advantages of CEPA and promoting the strengths of Korean products, fostering stronger local partnerships, and enhancing market recognition in the region.”