Some regions are known for their bounty of agriculture
—take the great breadbasket of the US mid-west, or the olive orchards and grape vineyards of Spain and Italy—while other regions have resources that contribute towards non-consumable products—Persian rugs from Iran, for example. Those regions are blessed with natural resources that allow a certain degree of specialization, contributing to their leadership as exporting hubs for their industry. Most nations have a few industries or natural resources that they are well-known for, there has never been a region as dominant in terms of production as China. The factory of the world. Every nation makes something, but just about everything bears the stamp: Made in China.
That all may change in the not-so-distant future, as more and more manufacturing is off-shored from China to other countries and regions. The recent diplomatic “tough talk” about trade wars, however, is not the primary cause for manufacturers relocating away from China; in fact this has been an industrial trend for several years. Back in 2011, UBS released a report signaling a “…pretty convincing turning point” for China’s light manufacturing industry, showing early signs of decline with labor-intensive capacity shifting towards Bangladesh and Vietnam. Reports in 2015 further highlighted evidence of rising labor costs as a driving factor for Japanese companies to reduce reliance on China as a manufacturing base.
As those Southeast regions absorb more of global production, their economies, in turn, grow to new heights.
Now, beyond the advantage of cheap labor and strategic geography for countries like Myanmar, Cambodia, and Laos, those areas are also gaining recognition as blossoming consumer markets. By 2030, reports Bloomberg, “more than half of 650 million people in Southeast Asia will be under the age of 30, part of an emerging middle class with high rates of consumption.” Economists at ANZ Bank speculate that the combination of production capacity and growing demand for consumption will lead the Association of Southeast Asian Nations to become the ‘third pillar’ of regional growth after China and India.”
In the short-term, manufacturing and industrial production in China is here to stay. Companies that are taking a long-term view, however, should be expanding their strategies to look beyond China, and into other high-potential regions of Asia.
Sean Doherty is a Colorado native and graduate of Metropolitan State University, living and working in Hong Kong, Shanghai, and Nanjing, China. Sean represents the Denver South Economic Development Partnership as the Greater China Exchange Coordinator, focused on fostering the exchange of ideas, strategies, and talent between China and the metro-Denver area. In 2016, Sean was selected as a Jiangsu Province Youth Friendship Ambassador. He can be reached at KairosHappens@gmail.com
- Product sourcing (from R&D through production, QC, and shipment)
- Factory audits
- China trip coordination and support
- Consulting on the China market and APAC region