Southeast Asia Wins &Nbsp With Low Wages; Wants To Compete With China For Manufacturing Industry.

As manufacturers look around the world for cheaper production sites, China's rising labor costs are an opportunity for other developing countries.

But China's

All this means that these markets need to do more than wage competition with China.

They will need to upgrade basic infrastructure and other aspects of the economy before they can become viable alternatives outside China.

A recent survey conducted by Credit Suisse on major European and US companies found that only about 1/5 of the companies said it would be easy to pfer the source of purchase from China to other countries.

This is because China has a solid foundation.

Nevertheless, economists believe that as China's costs become higher and higher, investment will inevitably flow to other regions, thereby accelerating the improvement of supply chain and infrastructure in these areas.

Fan Limin Neumann, a senior Asian economist at HSBC in Hongkong, said that in the past 15 years, as investors poured into China for cheap labor, China almost squeezed all the countries together. Now, as China moves upstream to the value chain, other countries have the opportunity to take the opportunity to enter the lower end of the value chain. "(Frederic Neumann)

An important example is Southeast Asia.

The population of this region is close to 600 million, which has been a popular investment in the world until it is overshadowed by China.

The average monthly salary of factory workers in Vietnam last year was about $136.

But there are also huge obstacles in Southeast Asia, including the underdevelopment of the judiciary and corruption.

And as local workers know more about China's salary increase and put pressure on manufacturers to raise wages, the cost spiral may be more serious than expected.

Le Yumin, President of Hongkong trading company Li & Fung Ltd. (Bruce Rockowitz) recently said at a news conference that if not all countries, at least in most countries, get pricing guidelines from China.

In spite of this, the company has been able to dissolve part of the cost rise pressure by pferring business to Indonesia, Vietnam and other places.

Several Southeast Asian countries, including Kampuchea, Vietnam and Indonesia, although wages are much lower than China, they have problems of inadequate infrastructure and can not support manufacturing industries that are much larger than before.

Moreover, no single Southeast Asian country has the strength to absorb large scale job opportunities inflow from China.

Leaders of Southeast Asian countries are actively promoting cooperation plans, hoping that by 2015, scattered resources from their respective countries can be integrated to form a unified market and production platform.

If the plan is fully realized, there will be less restrictions on the flow of skilled workers among countries in the region, and tariff procedures will be simplified.

Moreover, Southeast Asian countries have made progress in road and rail investment.

Thanks to the joint funding of the Asian Development Bank (ADB) and other agencies, the region has built three major pnational trade corridors, improving several highways connecting Kampuchea, Thailand, Vietnam and Laos.

Many companies in Southeast Asia also strive to achieve the goal of cooperation among enterprises.

More than 10 Southeast Asian garment suppliers have recently reached an agreement to build a garment supply chain between Kampuchea and other garment processing companies and suppliers in Thailand or other neighboring countries.

In fact, these companies have reached an agreement to cooperate in the production of commodities, with a view to providing a "one-stop" service for clothing similar to that provided by Chinese clothing suppliers, namely, procurement of yarn, cloth, buttons and sewing in the same area.

Garment Manufacturers Association in Cambodia, chairman of the Kampuchea Garment Manufacturers Association (Van Sou Ieng), said that the vision of Southeast Asia is to realize the operation mode of "one country and many provinces" rather than divide and rule ten countries in one region.

He said that although countries differ greatly, we must compete for more business from China.

Malaysia PCCS Group, a member of the chamber of Commerce, has operations in China and Kampuchea.

Yik Thong Choon, assistant general manager of the company, said that they had two factories in China. In the past 6 months, the wages of the workers in the factory had risen by 50%. Due to the scarcity of labour force, the capacity of two factories is still less than half.

In stark contrast, the number of factory recruits in Kampuchea exceeds its actual needs.

The situation of oversupply of this labour force will gradually change, but even if there is tension in the future, it should also be alleviated, because the company is recently promoting cooperation with a Thailand fabric manufacturer in order to provide support for Hongkong's apparel retailer business, so that the company has the opportunity to use the larger regional labor force market to complete the garment products.