Some of your favorite products could soon have a different label on them. That’s because five other countries are vying for China’s spot as the center of the world’s supply chains. China has been the factory of the world for the past four decades. Like everything else, the pandemic has created a new normal for the country.
China’s zero-Covid policy made it challenging for the country to keep up with the demand of the rest of the world. This zero-Covid policy allowed many leaders to wake up and realize the danger of depending on one country for most of their needs.
According to Business Insider, former President Trump first recognized this in 2018 when he launched a trade war with China which led to tariffs on an estimated $550 billion of Chinese goods. This was the start of investors searching for other places to relocate their manufacturing facilities. Thanks to the pandemic, other countries are now becoming major product hubs.
First on the list is India. Apple is one major company that has moved more of its iPhone production to the country as a direct result of problems with China’s zero-Covid policy.
Here’s what makes India a better option for manufacturers.
According to the UN’s Department of Economic and Social Affairs, India is set to surpass China in 2023 as the most populous country. The country has vast land and a large young population. Leaders also helping to push for more major companies in India is Prime Minister Narendra Modi. The Prime Minister has been working on attracting foreign direct investments since 2014. What could turn investors away from India is bureaucracy.
The second country that could replace China is Vietnam. Vietnam’s significant pros are its success in the manufacturing of apparel, footwear, electronics, and electronic appliances. The country has been undergoing economic reform since 1986. The reform is starting to pay off as companies like Nike, Adidas, and Samsung have shifted some of their production lines to Vietnam.
Thailand is also moving up the value chain, becoming a production hub for car parts, vehicles, and electronics. Both Sony and Sharp have relocated to Thailand.
Rising material and labor costs have pushed Bangladesh up on the list for manufacturers. The country is the world’s second-largest garments exporter. Now, Bangladesh is working to attract investments such as pharmaceuticals and agriculture processing.
Last on the list is Malaysia. So far, Malaysia has gained 32 projects that have relocated from China. Among the companies in Malaysia include US chip giant, Micron and iPhone cover manufacturer Jabil.
2023 could determine a significant economic shift for either of these countries.
Add comment