Top Five Trends in Business Dynamics

March 2025

In 2025, the global business environment will be shaped by geopolitical tensions, including US protectionism, technological advancements and labour market shifts. As the global market becomes more fragmented, businesses will need to adapt and seize new growth opportunities. This year also marks a key moment for AI adoption, with major companies and governments investing in digital infrastructure, while businesses integrate AI into their daily operations.

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Key Findings

Near- and friendshoring on the rise

In 2024, companies accelerated efforts to localise and regionalise production, aiming to reduce supply chain risks. “Friendshoring” is gaining momentum, as businesses prioritise partnerships with geopolitical allies. The shift away from China has been particularly driven by concerns over potential US import tariffs.

Labour gaps may hinder growth in high-tech industries

Lack of talent and skills is identified as a significant barrier to innovation. Businesses are struggling with skills and labour shortages in rapidly expanding high-tech sectors, such as semiconductor manufacturing and energy infrastructure. The insufficient growth in STEM (Science, Technology, Engineering and Mathematics) education is causing delays or even the abandonment of innovation projects.

AI infrastructure to drive future investments

AI-driven technologies demand substantial infrastructure and resources. Both governments and businesses are ramping up investment in critical areas like data centres, broadband connectivity and power generation. Such investment is essential for positioning companies and nations as leaders in the evolving industry landscape.

Rise of Southeast Asia as the global manufacturing and consumption hub

Rapid economic growth, a young and expanding labour force, political stability and government support initiatives have established Southeast Asia as one of the most interesting regions for companies, both those looking for new consumer markets and those that want to relocate their production.

Artificial intelligence to shape future innovation and business efficiency

AI-driven tools are creating opportunities for personalised products, boosting efficiency and reducing labour reliance. In developed markets with rising labour costs, AI and automation will enhance competitiveness by taking on routine tasks. As technology advances, automation will expand to developing markets and more complex tasks, boosting productivity.

Our expert’s view of business dynamics in 2025
Key findings
Global businesses to see significant shifts in labour, manufacturing and technology
Top five trends in business dynamics
Top five trends in business dynamics uncovered
New US tariff policy to deepen business complexity and hasten production relocation
Mexico automotive production hub threatened by uncertainty regarding tariffs
Newell moves production from China amid tariff concerns
Strategic relocation and automation are key to building resilient production networks
Global labour challenges hit high-tech and labour-intensive industries the hardest
TSMC faces delays in US plant construction due to labour shortages
Arla seeks government support to navigate UK’s reduced labour market post-Brexit
New strategies and efficiency growth are needed to adapt to labour shifts
Global R&D investments see strong growth, driven by US and China
France and UAE invest in 1-gigawatt AI data centre
Meta invests in its connectivity infrastructure
Strategic R&D spending gains momentum in the era of AI and automation
Asia Pacific remains global investment hub, driven by FDI growth in Southeast Asia
Apple expands manufacturing in India
BYD outsources production to Indonesia
Southeast Asia offers opportunities for market expansion and relocation
AI and automation drive cost-effective changes in manufacturing and logistics
Amazon chooses DeepSeek to offer cost-effective AI advancements
BMW deploys humanoid robots for routine tasks in their US factory
AI and automation enhance productivity, cost efficiency and operational resilience
Future implications
Opportunities for growth
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