IMF 2025 evidence shows that geographically concentrated import sourcing increases vulnerability to exporter-specific shocks, with Asian "connector" economies re-routing supplies rather than genuinely diversifying supply chains. The essential decision is whether to commit to targeted dual-sourcing, nearshoring or deeper Asian rebalancing. Impacted firms need to maintain service levels, manage inventory and protect margins while ensuring compliance evidence amid rising trade and climate uncertainty. The following scenario analysis sets assumptions, describes alternate futures and their impacts and aligns actions and controls with ISO 28000 and ISO 31000.
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Global focus
Cutting Asia concentration risk in consumer durables
Scenario analysis for Corporate Sustainability Due Diligence Directive choices
Scenario analysis
Consumer durables (all industries)
Publication date: 26 Jan 2026
By Eye For Business
AT A GLANCE
Firms can decide how far to shift sourcing from Asia hubs without eroding margins.
Options include tracking concentration and time-to-recover to expose single points of failure.
ISO 28000, ISO 31000 and Corporate Sustainability Due Diligence Directive audit evidence can help justify dual sourcing and stock decisions.
Assumptions and metrics
The decision over 3–5 years is how far to diversify away from Asia-centred hubs for critical consumer durables components, often balancing resilience and efficiency under EU Corporate Sustainability Due Diligence Directive (CSDDD) obligations. The key metrics are the share of spend from the top three (Asian) countries (a geographic concentration measure) and time-to-recovery for critical suppliers, both of which are inputs to stress tests. Large trade and climate shocks remain plausible, with IMF and OECD evidence showing concentration increases vulnerability. Firms can decide on the depth of supply-chain mapping and the level of dual-source coverage.
Three pathways
Three pathways describe how risk presents. A “managed resilience” scenario sets concentration limits under ISO 28000 (supply chain security) and ISO 31000 (risk management), invests in mapping and produces risk maps under CSDDD. The “most likely” scenario sees "China-plus-one" re-routing through Southeast-Asia without reducing overall dependence. The “pessimistic” stress sees under-investment, shocks hitting hubs, causing stock-outs and emergency re-sourcing, while laws expose firms to enforcement in Asian clusters.
Impacts by pathway
Each pathway affects cash, margin and compliance differently. “Managed resilience” raises costs but reduces volatility with associated IFRS S1 (sustainability disclosures) notes. “Most likely” preserves margins but could imply IFRS S1 more indicative of control weaknesses and potential incomplete provisions under IAS 37. “Pessimistic” stress triggers write-downs, higher freight spend and potential CSDDD enforcement, which may require IAS 37 provisions if outflows are probable.
Actions and controls
A phased plan separates actions that work across scenarios from conditional actions. Universal actions include multi-tier mapping, board-approved thresholds per ISO 28000 and audit evidence in line with CSDDD. Conditional actions include dual-sourcing for concentrated inputs. Firms should avoid blanket reshoring without cost evidence.
FURTHER READING
- Supply chain diversification and resilience (IMF)
- Towards demystifying trade dependencies (OECD)
- Corporate sustainability due diligence directive (European Commission)
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