China Made And Southeast Asian Manufacturing Staged PK War.

In recent years, some multinational companies have turned their attention to the Southeast Asian market. According to the 2012 world investment report released by the United Nations Conference on Trade and development (UNCTAD) in July 5th, foreign direct investment inflows to Southeast Asia in 2011 amounted to US $117 billion, an increase of 26% over the previous year, while China's growth rate was less than 8% in the same period.

Is "made in China" moving to Southeast Asia? Will "Southeast Asian manufacturing" replace "made in China" in the future? Some people in the industry have different views on this reporter's interview, but what is certain is that Made in China Industry, especially the low-end and middle end manufacturing industries, will face more intense competition.

The three big dividends of labor, capital and exchange rate are disappearing.

The main production of precision micro ball bearings, high-precision machinery, electronic components and other parts of Japan's Mei Bei Ya group saw the low labor cost in Kampuchea, and set up a factory there. Like in China, this factory is located in Phnom Penh's Special Economic Zone, with workers from the countryside. "We need to increase the output of high value-added projects in Thailand and China's production base, and shift labour intensive production out," the chief operating officer of the plant said. He said that dozens of foreign companies are now considering investing in Kampuchea.

An annual survey conducted by UNCTAD in 2012 showed that Indonesia and Thailand ranked the most in the ranking of the most popular host countries selected by multinational companies. The report holds that the relative competitiveness of ASEAN countries in manufacturing continues to grow as the wage costs and production costs of East Asian countries, especially China, continue to rise. Some foreign companies that have invested in China's coastal areas have moved to Southeast Asia, while others have shifted their production to China's inland areas.

Chen Rui, partner and vice president of management consulting, told reporters that the cost of labor, capital and exchange rate rose rapidly in China. The "three big dividends" were disappearing, which led some multinational companies to "fight" in Southeast Asia. In addition, some countries in Southeast Asia are also seeking to develop their own manufacturing industry.

Chinese enterprises are optimistic about the price advantage of Southeast Asian labor force

There are also many Chinese funded enterprises that transfer foreign capital to Southeast Asia. Earthquake Island (Kampuchea) clothing Zheng Shengzhong, manager of the limited company, told our reporter: "we moved to the market even when the labor force price rose."

"Similarly, the purchase of ten thousand yuan clothing to the EU countries," made in China "and" made in Kampuchea "the cost is quite different. For example, the two most favored nation and non most favored nation standard of Italy is import tax. In China, a $10 pants is exported to Italy, and Italy has to import a 12.5% import tax. The price of this pair of trousers is even 11.25 dollars. The same pair of trousers is produced in Kampuchea, and the cost of exporting to Italy is still 10 dollars. " Zheng Shengzhong told reporters, "moving the factory to Kampuchea, the cost can be reduced by about 10%."

Some Chinese companies investing in Vietnam also feel the same way. Yang Bin, general manager of Guangxi Sen Bao Electric Vehicle Manufacturing Co., Ltd., in an interview with our reporter in Hanoi, said that Vietnam's population structure is young and its labor cost is lower than China's overall. This is the advantage of Vietnam's development of manufacturing industry. However, reporters found in the survey, investment in Southeast Asian clothing Shoes and Hats Most of the enterprises still import equipment from China, and some also import fabrics from China, which still rely heavily on "made in China".

China remains the most attractive investment destination.

Well known in Germany Sports goods Card adida 97% of the footwear products under the group are from Asia. Although China accounts for the largest proportion of 35%, the proportion is decreasing year by year. Vietnam now accounts for second, about 29%, and Indonesia third is 26%. Kampuchea's share doubled in 2011. Recently, Adidas decided to close the only factory directly under China in Suzhou because of the strategy of re integrating global resources. It is said that it may move to Burma.

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Chen Rui said, manufacturing industry There is indeed a shift from China to Southeast Asia. There are shifts from FMCG to equipment. Industrial transfer is the same as rising or falling, but there is a problem of plate effect and succession. He said that for foreign capital, the export oriented enterprises will be faster and the Chinese market will be relatively slow. Generally speaking, labor-intensive and resource intensive manufacturing industries will be more transferred to Southeast Asia.

But Xu Changtai, director of Asian Research at Standard Chartered Bank, told reporters that no large-scale transfer of manufacturing from China to Southeast Asia was observed. He said foreign investment in manufacturing in Southeast Asia is on the rise, but it is difficult to ascertain whether the foreign investment has been withdrawn from China, as data show that foreign investment is still strong in China. The recent slowdown in foreign investment in China may be due to China's domestic economic slowdown and the global economic situation rather than southeast Asia's replacement of China.

Analysis shows that some industries, especially the technology industry, have not been successful in establishing factories in Southeast Asia. Xu Changtai said, first of all, China's logistics infrastructure is still more competitive than many Southeast Asian countries. Besides, Chinese manufacturers are no longer just producing for export, and domestic demand is playing an increasingly important role in China.

The report of the UNCTAD also believes that foreign direct investment in China's manufacturing industry has stagnated in the short term, but China remains the most attractive investment destination.

Made in China has not lost competitiveness.

Southeast Asia has become the destination of investors who want to diversify their investments. Japan's export oriented manufacturers, such as Bridgestone and Panasonic, the world's largest tire manufacturers, are setting up factories in Vietnam, according to the financial times. It is said that Vietnamese unskilled workers usually earn only 1/3 to half of their salaries in southern China. As the world's leading brand of camera lens, Tenglong set up its first overseas factory in Foshan, China's Pearl River Delta, and now the company plans to build a factory near Hanoi to invest $13 million.

According to the analysis, many Japanese enterprises set up factories in Southeast Asia to reduce costs in China, diversify production and reduce dependence on a single manufacturing base to avoid losses similar to last year's Thailand floods and Japan's tsunami.

Xu Changtai believes that due to China's efforts to obtain high value-added manufacturing, some labor-intensive industries and low-end manufacturing industries will be transferred to low-cost Southeast Asian countries such as Indonesia and Vietnam. Chen Rui said that China is still a manufacturing country. It is not particularly distinguished from manufacturing industries in Southeast Asia.

Some market participants who contacted European and American companies told our correspondent that although foreign investment had not been transferred from China in large scale, China should also face up to possible changes, especially the changes in the strength of China's own labor market, and adjust them in a timely manner.

Qu Hongbin, managing director of HSBC and Asia economic research and chief economist of Greater China, told reporters that the recent decline in China's manufacturing export orders reflects mainly the lack of demand, not the loss of competitiveness of China's manufacturing industry. Scale economy, improvement of infrastructure and the policy environment accumulated since the reform and opening up are all the advantages of maintaining the "world factory" in China.