middleclass

ASEAN – The next PRD?
Special Report: Shop Talk – China, ASEAN and robotics
One in seven manufacturers in
China prefer to move their
operations outside
ASEAN – Poised to benefit
Opportunities for ASEAN
ASEAN is the preferred destination for manufacturing, outside China
Relocating capacity outside China as manufacturing becomes more expensive in the
PRD has become increasingly attractive over the years. While only 9% of clients
were keen on moving their operations out of China in 2013, over 13% of respondents
this year said they are keen on this option. The numbers seem low, partly because
the survey only includes respondents who still have operations in the PRD region;
manufacturers who have already moved their operating base outside the PRD, which
would have boosted the share, are excluded. Nevertheless, we expect the share of
corporates preferring to move out of China to increase along with rising wages in
China as the country moves up the manufacturing value chain and other countries
hone their manufacturing capabilities. Overall, the option to move capacity out of
China has been the only increasingly preferred option in the past few years.
ASEAN has consistently topped the list of preferred destinations among our clients
who have expressed keenness to move their manufacturing operations out of China.
Almost 80% of respondents preferred ASEAN as their manufacturing base, in line
Figure 1: How do you respond to labour shortages?
% of respondents, this and past surveys
Figure 2: If you plan to move capacity out of China, to
where?
% of respondents
Invest more in automation/
streamlining processes*
Invest more in
capital equipment
Move capacity
inland
2016
2015
2014
2013
Vietnam
Cambodia
Bangladesh
Thailand
India
Philippines
5%
3%
5%
3%
7%
10%
25%
36%
42%
2016
2015
Move capacity
out of China
0% 20% 40% 60% 80%
Sri Lanka
Indonesia
2%
5%
2%
10%
* Not an answer option before 2015; Source: Standard Chartered Research Source: Standard Chartered Research
Figure 3: What are your cost savings from your potential
action?
% of respondents
Figure 4: What are your cost savings from moving out?
% of respondents
Move out of China
Move capacity inland
More capex
Invest in automation
21%
19%
15%
17%
13%
2016
14%
2015
14%
12%
Vietnam
Cambodia
Bangladesh
Thailand
India
22%
19%
19%
20%
23%
23%
20%
23%
28%
2016
2015
31%
Source: Standard Chartered Research
Source: Standard Chartered Research
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