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China a leader in manufacturing over next 5 years
By Richard Fu |
January 23, 2013, Wednesday
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Online Edition
Online Edition
CHINA remains in first place in manufacturing competitiveness, today and five years from now, thanks to its advantage in low labor cost, government investment in manufacturing, and well-established supplier network, according to a new report.
The report, prepared by Deloitte and the US Council on Competitiveness, is based on an analysis of survey responses from more than 550 chief executive officers and senior leaders at manufacturing companies worldwide.
China is expected to remain a leader in manufacturing over the next few years, bolstered by conducive policy environment either encouraging or directly funding investments in technology, employee education and infrastructure development, the report said.
Still, the report confirms that the landscape for competitive manufacturing is in the midst of a massive power shift, in which 20th century manufacturing stalwarts like the US, Germany and Japan will be challenged.
Ricky Tung, co-leader of the Manufacturing Industry Group at Deloitte China, said the CEO survey seems to suggest China is becoming increasingly a developed nation competitor than its emerging economy counterparts.
"In addition to supportive policies, China still has relatively lower labor costs and is above average in the attractiveness of its corporate tax rates. With its focused efforts to localize supply chains and create innovation hubs, China is also seen by CEOs as the only emerging nation offering the same supplier network advantages as developed nations," Tung said.
Germany and the US are also in the top three spots but, according to the survey, both will fall five years from now with Germany ranking fourth and the US at fifth. The two other developed nations currently in the top 10 are also expected to be less competitive in five years, with Canada sliding from seventh to eighth and Japan falling from 10th to 12th.
Key emerging nations are set to vault forward in five years, with Brazil jumping from the current eighth place to third and India rising to second from fourth.
Not surprisingly, frontier markets in Asia such as Vietnam and Indonesia are also on the rise. While China and India are prominent, manufacturers are turning their focus to these frontier markets for growth to capture both the growing local demand and to serve as strategic manufacturing hubs in the global value chain, according to the report.
The report also found that access to skilled workers is the top indicator of competitiveness 鈥 followed by trade, financial and tax system, and then the cost of labor and materials.
The report, prepared by Deloitte and the US Council on Competitiveness, is based on an analysis of survey responses from more than 550 chief executive officers and senior leaders at manufacturing companies worldwide.
China is expected to remain a leader in manufacturing over the next few years, bolstered by conducive policy environment either encouraging or directly funding investments in technology, employee education and infrastructure development, the report said.
Still, the report confirms that the landscape for competitive manufacturing is in the midst of a massive power shift, in which 20th century manufacturing stalwarts like the US, Germany and Japan will be challenged.
Ricky Tung, co-leader of the Manufacturing Industry Group at Deloitte China, said the CEO survey seems to suggest China is becoming increasingly a developed nation competitor than its emerging economy counterparts.
"In addition to supportive policies, China still has relatively lower labor costs and is above average in the attractiveness of its corporate tax rates. With its focused efforts to localize supply chains and create innovation hubs, China is also seen by CEOs as the only emerging nation offering the same supplier network advantages as developed nations," Tung said.
Germany and the US are also in the top three spots but, according to the survey, both will fall five years from now with Germany ranking fourth and the US at fifth. The two other developed nations currently in the top 10 are also expected to be less competitive in five years, with Canada sliding from seventh to eighth and Japan falling from 10th to 12th.
Key emerging nations are set to vault forward in five years, with Brazil jumping from the current eighth place to third and India rising to second from fourth.
Not surprisingly, frontier markets in Asia such as Vietnam and Indonesia are also on the rise. While China and India are prominent, manufacturers are turning their focus to these frontier markets for growth to capture both the growing local demand and to serve as strategic manufacturing hubs in the global value chain, according to the report.
The report also found that access to skilled workers is the top indicator of competitiveness 鈥 followed by trade, financial and tax system, and then the cost of labor and materials.
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