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China's manufacturing 'alternative' in Asia

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Update time : 2019-11-27 14:56:29

Recently, bloomberg economic research compared China's Asian export competitors based on labor costs, infrastructure, corporate environment, financial and political stability, export capacity, and human capital. India, Indonesia, Vietnam, the Philippines and Thailand rounded out the top five.

 

India ranks high because of its population advantage. India is set to overtake China as the world's most populous country by 2050, and its working-age population is expected to exceed 1 billion. India's efforts to catch up with China began five years ago when prime minister narendra modi launched the "make in India" initiative, which aims to encourage foreign companies to open factories in India. The Indian government is currently releasing more favorable policies for foreign investment. In August, the government announced it would relax rules on foreign direct investment in sectors such as retailing and manufacturing.

 

In Indonesia, President jokowi has ordered a push to make it easier to do business. According to the world bank's recent doing business 2020 report, Indonesia ranked 73rd out of 190 countries or regions surveyed for ease of doing business. Jokowi hopes to improve to 40th place in the future.

 

The head of a machining company with a factory in Indonesia told the international finance news that he chose to go to Indonesia because of market demand, labor costs and other factors.

 

"At present, we have the largest number of customers and the largest demand in Indonesia. There is fierce competition among domestic enterprises of the same type. Above all, Indonesia has low Labour costs. "The wages of the workers are roughly half of what they are paid in China, and the operating capacity is comparable to that of Chinese workers." The person in charge said. But the plant also faces a problem: local steel prices are 30% to 40% higher than at home.

 

At the same time, re-establishing supply chains, marketing channels and relationships in these countries presents challenges.

 

"Generally speaking, the migration to southeast Asia is mainly in labor-intensive industries such as clothing and textiles, but Indonesia is not rich in skilled people, such as skilled workers in precision machinery. Our company has dispatched domestic technicians to organize production there. Indonesia is not a good place for high-tech companies such as robotics (13.570, 0.14, 1.04%) and biomedicine. In the local area, there are few related supporting industries, such as robot parts and biomedical raw materials." The head of the company told the international financial news reporter.

 

A bloomberg interview also showed that a maker of garden and home accessories in quanzhou, fujian province, whose U.S. sales fell 30 percent after trump imposed the tariffs, is not considering moving production abroad. Instead, the company has sought other strategies to sustain its exports, such as applying for patents in Europe to expand sales there. The head of the company says that while labor costs are much cheaper in Vietnam, the culture is very different. Chinese workers have more skills and can accept overtime, but Vietnamese workers are different.

 

Bloomberg said China retains other advantages, including strong and stable leadership, a large domestic market and relatively good access to capital.

 

India's advantage of abundant cheap Labour is offset by other factors, such as inadequate infrastructure, inadequate Labour laws and rampant bureaucracy.

 

Aravind Yelery, a researcher at Peking University's HSBC business school, told the international finance news that although India's policy push has created a good ecosystem with the potential to develop into a manufacturing powerhouse, the experience of the past few years suggests that India has many challenges.

 

"It is relatively difficult for an emerging manufacturing economy like India to keep up with manufacturing developments. It has to do with the challenges associated with global demand, volatility, technology and so on. In the 21st century, manufacturing involves not only factory floors and mass production, but also cutting-edge inventions and real-time deployment. Policies must be more robust and prudent to encourage domestic manufacturers to adapt to changing conditions. In India, the challenges of manufacturing development are mainly at the policy, regulatory level, and some unresolved difficulties remain on the ground. This will require a concerted effort to avoid untimely policy risks." Aravind Yelery.

 

Aravind Yelery also pointed out that "China's manufacturing sector is huge and it can provide very convenient conditions for global supply chains. India has yet to achieve its goal of catching up with China. And as China's middle class grows, demand for higher-value products grows, and China's entry into free trade agreements means there is more room for growth."

 

Aravind Yelery says China's rising human resources costs do cause some manufacturing to relocate. It also means that more skilled human resources can better promote the development of high-tech industries. China has a large pool of skilled workers in areas such as automation and technology, making it easy for any foreign company looking to develop in these areas to find suitable workers in China.

https://www.infignos.com/templates/updatelistingnow.cfm?email=ryanlee901213@gmail.comShenzhen Kangda Precision Manufacturing Co.,Ltd.,Machining Manufacturer,Shenzhen,FL