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Supply Chain & Operations

Manufacturing Footprint in the Next Decade

Pressured from shrinking labor arbitrage, pollution control, punitive tariffs, and intensified competition, manufacturers are seeking new alternatives to replace China in the near future.
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Overview​

A new round of manufacturing relocation and global value chain renovation has been initiated. Following historical trends, the decade to come will witness an increasing number of manufacturers leaving China for other emerging markets.
Pressured from shrinking labor arbitrage, pollution control, punitive tariffs, and intensified competition, manufacturers are seeking new alternatives to replace China in the near future.
Southeast Asia and India are the most promising economies to absorb foreign investment in the manufacturing sector with key focuses on textile/garment, consumer electronics, and machinery.
The Belt and Road Initiative by China has objectives to promote trade, sustain growth, and upgrade the domestic value chain through connectivity, another key contributor to outward production shifting.

The migration of manufacturing to another country normally takes at least two years to transition into mass production from initiation; pre-study of migration feasibility requires an excessive amount of research about targeted countries’ demographics, economic openness, infrastructure, logistics, etc.

It is an inevitable trend for manufacturers to leave China for cheaper production, but given the scale of its economy, China will continue to be the world’s largest manufacturing hub, surrounded by multiple satellite countries with respective specializations in certain product categories.

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