Asia-Pacific industrial transactions grow against the trend: transaction volume expected to rise 2% in 2026

Asia-Pacific Industrial Deals Defy the Trend: Transaction Volume Expected to Rise 2% in 2026

Against the backdrop of widespread pressure on the global M&A market, the Asia-Pacific region is showing rare resilience. PwC's latest mid-year M&A outlook shows that transaction volumes in the Asia-Pacific industrial and services sectors are expected to grow by 2% in 2026, while global overall transaction volumes are projected to decline by 7% over the same period. Behind this contrast lies a deep restructuring of Asia's manufacturing landscape.

Manufacturing Relocation and Supply Chain Restructuring Drive Deals

India and Southeast Asia are becoming new hotspots for global manufacturing investment. As companies accelerate their "China+1" strategy, diversifying production bases to India, Vietnam, Indonesia and elsewhere, related M&A activity is also picking up. PwC points out that the trend toward localized production in these regions will generate numerous business development opportunities, particularly for manufacturing operations that benefit from supply chain restructuring.

Meanwhile, deal activity in Japan and South Korea is focused on automation, battery technology and electronics. These two countries' advantages in high-end manufacturing and precision components make them key battlegrounds for M&A in automation upgrades and new energy supply chains.

Automation and AI Infrastructure: Core Drivers of Deals

The focus of manufacturing deals is shifting toward assets that support AI infrastructure, grid resilience and automation. PwC data shows that by 2030, the median proportion of industrial manufacturers with highly automated processes is expected to rise from 18% to 50%. This trend is driving investment demand for robotics, industrial software, sensors and interconnected systems.

For Asian companies, automation is not only a tool to improve efficiency but also an inevitable choice to address rising labor costs and demographic changes. Companies that can provide intelligent manufacturing solutions will become hot targets in the M&A market.

Cross-Border Deals Still Face Headwinds

Despite the positive outlook for overall Asia-Pacific deals, cross-border transactions still face challenges from geopolitical uncertainties, tariff barriers and adjustments in national industrial policies. PwC emphasizes that cross-border deal activity may remain uneven, and companies need to carefully assess risks.

Notably, some companies are optimizing their portfolios by divesting non-core assets or spinning off manufacturing operations, creating opportunities for private equity and strategic buyers. In particular, localization manufacturing targets in India and Southeast Asia are expected to attract significant capital interest.

Outlook: The Long-Term Logic Behind Regional Resilience

The contrarian growth in Asia-Pacific industrial transaction volumes is no accident. It reflects the long-term trend of the global manufacturing center shifting from China to a broader Asian region, and also embodies the collective efforts of regional economies in technological upgrading and supply chain security. As AI and automation technologies accelerate their penetration, the Asian industrial M&A market is likely to remain active in the coming years.However, investors still need to pay attention to policy changes and geopolitical risks, especially against the backdrop of ongoing US-China technology competition and frequent adjustments in various countries' industrial subsidy policies. Transaction growth in the Asia-Pacific region is not smooth sailing, but compared to other regions globally, it clearly offers a more attractive window of opportunity.