During 1990, China was reported to have produced only 3% of the worlds manufacturing development. In the past decade, China has successfully become one of the largest manufacturing hubs, with half of the worlds products being developed there. Due to the low cost of manufacturing China has become the second largest economy in the world in 2019, compared to its previous ninth position ranking in the 80’s.
As of recently, China is quickly transitioning into high-tech manufacturing as labor costs continue to grow. An increase in these costs is forcing industry leaders to look outside China for additional manufacturing infrastructure.
A study on future global competitiveness conducted by Deloitte Global and the U.S. Council on Competitiveness, has predicted that the U.S. will eventually dislodge China as the top manufacturing nation around the globe by 2020.
“Manufacturing competitiveness, increasingly propelled by advanced technologies, is converging the digital and physical worlds, within and beyond the factory to both customers and suppliers, creating a highly responsive, innovative, and competitive global manufacturing landscape,” says Craig Giffi, a leader in Deloitte US Consumer & Industrial Products Industry group and co-author of the report.
There are a lot of key reasons for finding the best nation for mass manufacturing. Countries with a stable enough political and economic environment, up to date infrastructure, and workable legal system are ideal for any manufacturing hubs. Experts and business owners are heavily discussing the labor costs, capital costs, productivity and efficiency of manufacturing in other potential countries. Here are some of the most anticipated nations to become the next manufacturing hub of choice.
Vietnam
Vietnam has been one of the few Asian countries that have stepped up to the plate in order to overtake certain sectors of manufacturing as China struggles to deal with its current tariff and labor cost ordeals. A recent report conducted by TradeReady revealed that merchandise exports have increased up to 20% between 2005 and 2013, making it one of the fastest growth rates within the region.
Vietnam has worked hard to improve several aspects of public life to keep up with the increase economic development including universal health care, job skills training, improved education, and increasing infrastructure development. Vietnam is also known for its stable political environment, investment in infrastructure and it’s advantageous location for manufacturing goods.
Indonesia
Indonesia manufacturing industry can account for almost a quarter of their gross domestic product (GDP), according to information provided by manufacturingindonesia.com. Indonesia’s economy has steadily become quite stable when compared to the surrounding countries in the region.
Their manufacturing industry has seen a 5% growth in recent years which is higher than the national economic growth rate of 4%. The country also has access to a large market due to the growing population of 240 million people, which has placed it as the third largest market in Asia, right behind China and India.
The government is currently decentralized making authority loose and somewhat unpredictable. The uncertainty has turned off some businesses from working with Indonesia, but things have been changing for the better in recent years. Indonesia is less established as a global manufacturing and still suffers from infrastructure issues seen in China circa the 80s and 90s. Despite its current economic problems, manufacturing continues to see growth within Indonesia’s borders.
Thailand
With its well-developed infrastructure, stable economy, and competitive investment incentives, Thailand has gained the attention of many entrepreneurs, leading to a steady flow of cash being introduced to its manufacturing development. Thailand has managed to focus its manufacturing development into high and medium level technology over low-cost labor manufacturing.
Thailand has built strong automotive, electronics, food, and chemical industries using their technology-based competitive advantages. While Thailand has had its share of political conflict and severe natural disasters, the country still successfully thrives and improves economically. Thailand’s manufacturing sector manages to employ over 16% of the workforce in its nation, which has led to the creation of over 9 million jobs.
India
Manufacturing in India has become one of the fastest growing sectors within the nation. The Prime Minister of India launched a “Made in India” program to lead the movement to becoming one of the largest manufacturing hubs around the globe and to boost worldwide recognition of India’s growing economy.
Reports made by the India Brand Equity Foundation reveals that India is expecting to become the fifth largest manufacturing hub in the world by the end of the year 2020.
The market size for manufacturing also continues to see growth on an average of 8% on a yearly basis. Several smartphones, automobiles and luxury brands, and much more have already successfully established their own manufacturing plants in the country. India’s manufacturing industry continues to but training will need to remain constant to ensure that the labor force will remain relevant for the future needs of its growing manufacturing sector.
Singapore
The manufacturing sector has become Singapore’s highest economic growth in recent years, according to recent figures revealed by the Ministry of Trade and Industry (MTI). During 2018, the manufacturing sector increased by 10.2% year-on-year, which MTI stated a “robust” showing amid the increasing global tension over trade skirmishes.
Manufacturing industries within Singapore are seeing universal growth with electronics, biomedical and transport engineering clusters leading the way.
It’s political climate and growing infrastructure has also made it a stable place for any business to go and conduct its manufacturing businesses.
Global manufacturing will experience large shifts in the coming years as technology leads to new opportunities and reduced production costs. Each of these manufacturing countries come with their own set of pros and cons in regards to their capabilities. However, it still remains to be seen whether any of these countries will succeed in taking China’s crown as the leading member of the manufacturing market, as companies look to produce outside of China.
After three decades of relentless growth China’s manufacturing development has become more stable. With the issues of increased salaries, stricter labor standards and rampant pollution, China is no longer always the country of choice for many US and European businesses.