“Factory Asia” began with facilities in China assembling products from higher-tech components manufactured elsewhere for sale to consumers in wealthier parts of the world. From this simple model has grown a manufacturing behemoth: today, China and its neighbours produce almost half the world’s goods. Over the past two decades, the manufacturing industry in Asia has grown and evolved in two key ways that are of particular importance to global business.
The first fundamental shift is one the manufacturing community already knows well. Rising costs in China’s major manufacturing centres are pushing the “Factory Asia” supply chain further into China’s hinterland and into its Southeast Asian neighbours. The economic and political headwinds pushing against China’s manufacturing dominance are discouraging some businesses from growing their Asia Pacific presence and in some cases are encouraging ‘on-shoring’ – moving production away from Asia and back home.
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By Paul Butterworth MNI, Global Head of the Maritime & Shipping Practice at Odgers Berndtson