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China may see other avenues even as output goes to ASEAN
Source: Xinhua |
September 25, 2012, Tuesday
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EXPERTS and scholars attending the ongoing ninth China-ASEAN Expo being held in Nanning said that although China is losing some of its manufacturing business to southeast Asia, the sector will still see new avenues and opportunities that will allow them to develop together.
Some ASEAN (Association of Southeast Asian Nations) members have started to take China's place as the "world's factory." Vietnam is a good example, usurping China to become the largest producer of Nike shoes in 2010.
In July, sportswear giant Adidas said it would close its only affiliated factory in Jiangsu Province, with plans to relocate the factory to Myanmar.
Research by the United Nations Conference on Trade and Development indicates that rising labor and production costs in China have made it less competitive than some member states of ASEAN.
Foreign companies are not the only ones looking to capitalize on southeast Asia's cheap labor, with several domestic companies moving their factories there.
Although Guangdong Province still reigns as the world's biggest manufacturer of computer parts, several electronics companies have moved their factories to southeast Asian countries, said Chen Zhihua, president of the Guangdong Computer Vendors' Chamber of Commerce.
A UNCTAD investment report said US$117 billion worth of foreign direct investment went into southeast Asia in 2011, up 26 percent annually, while FDI to China gained 8 percent.
Chen Jiagui, former associate dean of the Chinese Academy of Social Sciences, said transferring manufacturing to southeast Asia is inevitable as China has entered the next stage of industrialization, which means rising labor and land costs.
Research conducted by UNCTAD this year indicates that transnational corporations believe Indonesia and Thailand have benefited greatly from the relocation of industries there.
"Relocation has directly promoted the development of local economies," Chen Jiagui said.
Vietnam can speak for the benefits of industrial relocation. After Nike transferred more of its orders to Vietnam, the country saw its manufacturing industry output value increase, as well as an overall industrial upgrade that has allowed it to produce more high-end goods.
"Southeast Asian countries' lower labor costs and land prices have attracted more overseas and Chinese investors," Chen Jiagui said, adding that less trade friction and avoidance of trade barriers have also prompted foreign companies to move their factories to southeast Asia.
However, experts at the expo said China's manufacturing industry still is able to remain dominant in the future.
"China has a higher-quality labor force due to compulsory education, making its labor incomparable to that of southeast Asia," Chen Jiagui said.
Infrastructure in some southeast Asian nations remains poor and investors will have to spend more capital and time on preliminary construction, said Li Hui, vice president of Guangdong Zhenrong Energy Co Ltd.
Some ASEAN (Association of Southeast Asian Nations) members have started to take China's place as the "world's factory." Vietnam is a good example, usurping China to become the largest producer of Nike shoes in 2010.
In July, sportswear giant Adidas said it would close its only affiliated factory in Jiangsu Province, with plans to relocate the factory to Myanmar.
Research by the United Nations Conference on Trade and Development indicates that rising labor and production costs in China have made it less competitive than some member states of ASEAN.
Foreign companies are not the only ones looking to capitalize on southeast Asia's cheap labor, with several domestic companies moving their factories there.
Although Guangdong Province still reigns as the world's biggest manufacturer of computer parts, several electronics companies have moved their factories to southeast Asian countries, said Chen Zhihua, president of the Guangdong Computer Vendors' Chamber of Commerce.
A UNCTAD investment report said US$117 billion worth of foreign direct investment went into southeast Asia in 2011, up 26 percent annually, while FDI to China gained 8 percent.
Chen Jiagui, former associate dean of the Chinese Academy of Social Sciences, said transferring manufacturing to southeast Asia is inevitable as China has entered the next stage of industrialization, which means rising labor and land costs.
Research conducted by UNCTAD this year indicates that transnational corporations believe Indonesia and Thailand have benefited greatly from the relocation of industries there.
"Relocation has directly promoted the development of local economies," Chen Jiagui said.
Vietnam can speak for the benefits of industrial relocation. After Nike transferred more of its orders to Vietnam, the country saw its manufacturing industry output value increase, as well as an overall industrial upgrade that has allowed it to produce more high-end goods.
"Southeast Asian countries' lower labor costs and land prices have attracted more overseas and Chinese investors," Chen Jiagui said, adding that less trade friction and avoidance of trade barriers have also prompted foreign companies to move their factories to southeast Asia.
However, experts at the expo said China's manufacturing industry still is able to remain dominant in the future.
"China has a higher-quality labor force due to compulsory education, making its labor incomparable to that of southeast Asia," Chen Jiagui said.
Infrastructure in some southeast Asian nations remains poor and investors will have to spend more capital and time on preliminary construction, said Li Hui, vice president of Guangdong Zhenrong Energy Co Ltd.
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