Since the Liberation Day announcement of tariffs—and the subsequent 90-day pause—companies across Asia have been asking themselves a pressing question: how do we adapt to an increasingly protectionist world without compromising competitiveness or resilience?
As trade tensions simmer and economic headwinds persist, boardrooms across Asia are moving quickly to reassess supply chains, reconsider strategic markets, and reframe their approach to risk. What was once a theoretical “Plan B” is fast becoming operational reality.
The recent "Adapting to Global Economic Shifts: Asia Pacific Survey" conducted by WTW reveals how Asian companies are strategically responding to these ever-shifting dynamics. Amidst the economic pressures amplified by tariffs, talent retention issues, and evolving ESG directives, business leaders are called to balance immediate financial considerations with long-term strategic aims.
Bracing for impact
The survey highlights a growing concern regarding new tariffs' impact on profitability across Asia. Nearly half of the organizations expect a direct negative influence, ranging from substantial to moderate, which urges businesses to brace for potential financial challenges. Interestingly, the other half of the companies did not expect direct negative impact on profitability, but are anticipating possible indirect impact from broader market downturns (e.g. bearish stock markets).
These geopolitical shifts necessitate a strategic reevaluation of business models, prompting firms to explore adaptive strategies to ensure resilience and sustainability.
Strategic responses to tariff-induced challenges
In response to the adverse effects of tariffs, organizations are employing a range of strategic measures (Figure 1). Cost reduction emerges as a key approach, with nearly half considering operational cuts, including headcount reductions. Very interestingly, a pivotal shift towards intra-regional resilience is observed, with 37% exploring new markets within Asia and 33% diversifying supply chains in the region. This focus underscores a broader trend towards reinforcing regional supply chains to bolster agility and continuity amidst economic flux.
Important to note that there was only a modest inclination to transfer manufacturing to the U.S., with a mere 8% contemplating this option. These findings emphasize Asia's strategic importance in global supply chains, underscoring the need for flexibility and preparedness to withstand and thrive amidst economic shifts.
Navigating workforce-related concerns
In this evolving economic climate, workforce management emerges as a vital focus. The survey identifies significant concerns: the risk of losing critical talent (57%) and the capacity of leaders to navigate ambiguity (51%). The competitive landscape for talent drives organizations to invest in leadership development and employee engagement as integral components of their growth strategy.
Moreover, the emphasis on employee wellbeing, with over a third expressing concern (Figure 2), underscores the need for creating a supportive work environment that prioritizes well-being to sustain productivity and morale. This focus on adaptability in leadership and talent management illustrates a strategic commitment to navigate the uncertainties of the economic landscape.
Adjustments to compensation plans
In response to shifting economic conditions, organizations are revisiting their compensation frameworks. Approximately a quarter of respondents are contemplating changes to incentive metrics, with considerations for market volatility driving modifications to performance goals and long-term incentive plans. These adjustments aim to maintain employee motivation and ensure alignment with evolving corporate objectives.
While companies explore these changes, nearly half prefer highlighting potential impacts to their Remuneration Committees, seeking discretionary adjustments to performance targets or achievements at the end of performance cycles. This balanced approach reflects the importance of aligning strategic change with the realities of new economic landscapes.
ESG and DEI: A commitment to future resilience
Against global backdrop of discontinuing or deemphasizing of sustainability priorities, Asian companies plan to continue their commitment to ESG (Environmental, Social, and Governance) and DEI (Diversity, Equity, and Inclusion) programs. The majority (76%) of companies plan no significant changes to these programs, recognizing their long-term value and impact in sustaining reputation and strategic objectives.
Persisting with these initiatives during challenging times underscores the belief that sustainable, inclusive business practices are not mere regulatory or check-the-box obligations but core elements of companies’ talent strategies and foundational to their enduring resilience and success.
The WTW survey findings underscore the indispensable need for adaptability, strategic foresight, and a dedicated commitment to people and sustainability. As organizations in Asia adapt to the complexities of the global economic landscape, several key learnings emerge.
First, the dual emphasis on cost reduction and regional diversification highlights the necessity of operational flexibility and resilience. Agility is crucial for navigating volatile market conditions and ensuring competitive advantage.
Second, talent management emerges as a strategic cornerstone. Investing in leadership capabilities, retaining critical talent, and fostering employee well-being are pivotal for thriving amidst change. Moreover, willingness to adjust compensation plans reflects strategic alignment of rewards with performance in fluid markets. Transparency and engagement are key in sustaining a motivated workforce.
Lastly, an enduring commitment to ESG and DEI initiatives reveals a forward-looking perspective, balancing short-term financial goals with long-term strategic vision. By championing sustainability and inclusion, companies can align employees’ potential with business opportunities; a critical strategy, germane to companies’ talent imperatives.
As we advance into the latter half of 2025, the path forward demands proactivity in adapting people strategies to address evolving business models and unexpected rise in costs. The adage “in the middle of difficulty lies opportunity” reminds leaders to continue to transform challenges into avenues for success and innovation, steering their organizations towards a future marked by resilience, sustainability, and shared prosperity.
