Looking At The Development Direction Of Manufacturing Industry From Adidas'S Pursuit Of Low Cost Withdrawal From China

Feng Shui turns around, and now turns.

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New Zealand has become a new hot spot of capital pursuit in the past few years, just as it once did to China.

Not only did some foreign companies move away from China and set up factories in Southeast Asian countries, but also some local enterprises in China moved to Southeast Asia under the drive of low cost.

With this investment boom, there is another voice: will emerging Southeast Asian countries become the next China to become the "dynamo" of the world economy? The answer is "not necessarily".

The inherent defects of these emerging Asian countries, which are small in the domestic market, determine their limited attractiveness to capital and determine their limited ability to drive world economic growth.

Hot Southeast Asia

From the perspective of capital flow, Southeast Asian countries have been "hot" in recent years.

Take Indonesia (hereinafter referred to as "Indonesia") as an example. At present, foreign direct investment (FDI) flowing into Indonesia is more than 3 times that of five years ago.

In the second quarter of 2010, FDI, which flows into Indonesia, was US $3 billion 697 million. Although it has dropped sharply compared with the previous quarters, it has increased by more than 2.5 times compared with the 1 billion 34 million US dollars in the same period in 2007, while Indonesia's FDI was only 407 million US dollars 8 years ago.

Indonesia's gross domestic product (GDP) is consistent with the trend of FDI.

Indonesia's FDI rose from the fourth quarter of 2010 to a peak of 5 billion 428 million US dollars in the fourth quarter of 2011. Similarly, Indonesia's GDP rose to around 6.5% in the fourth quarter of 2010, from 5.77% to 6.83% in the previous quarter, and 6.37% in 2012.

Indonesia is one of the most popular capital inflows in Southeast Asian countries.

According to Pang Jinfeng, the chief business officer and the director of the global research center, 15~25, the Indonesian population at the age of 15~25 has a high level of education, and Indonesians are also the best people in Asian countries.

Half of these young people are concentrated around Java island, which is a hot spot for foreign investment in Indonesia.

At the same time, Indonesia's policy and social climate in terms of racial equality and gender equality are relatively relaxed compared to neighboring Malaysia.

Another hot spot for investment in Southeast Asia is Vietnam.

According to Vietnamese media reports, the total amount of FDI contracts in Vietnam has increased 5.1 times in the past five years, and the actual utilization of foreign capital has increased by 3.3 times.

However, in 2012, Vietnam's FDI growth showed a downward trend.

In the first few months, the amount of foreign capital contracted by Vietnam was 8 billion 30 million US dollars, and foreign capital reached US $6 billion 250 million, close to the same period last year.

More than 60% of the FDI contracts go to the processing and manufacturing sector.

Vietnam's GDP growth has also dropped from 6% in the past two years to 4% this year.

In emerging Southeast Asian countries, another investment potential is Burma, which was lifted by the US in early July.

Burma is rich in natural resources. Foreign investment projects in Burma account for more than half of its resources. The main source countries are Asian countries and the United Kingdom.

In July, the United States relaxed sanctions against Burma, approved the investment of American enterprises in Burma, and cooperated with the state-run Burma Oil and Natural Gas Corp.

In the future, capital of the United States will also begin to flow into Burma.

Burma used to be a British colony. It has some similarities with the West in terms of language, culture and business philosophy, and has certain convenience for the investment of English speaking countries.

In addition, Thailand, Kampuchea, Bangladesh, Pakistan and other countries have seen similar rapid influx of foreign capital in recent years.

In contrast to Southeast Asian countries, China, which has always been regarded as a hot spot for investment, dropped 3.6% in real terms in the 1-7 months of this year compared with the same period last year. The number of newly established foreign-invested enterprises across the country dropped by 12.3% over the same period last year, triggering worries about "made in China".

Pursuing low cost

Lately

It is announced that it will be closed to Chinese factories in October to become the latest evidence of "made in China" concerns.

The reason for Adidas's withdrawal from China is the rise in labor costs in China. It is reported that Adidas will shift its capacity to Vietnam with lower labor costs.

In terms of labor costs alone, the average wages of Vietnam and other Southeast Asian countries are actually lower than those of China.

According to ahan Hewitt's data, China's average annual wage growth in the past ten years is 7%~8%.

Compared with countries like Singapore and Japan, the cost of labor in China is still low, the average salary of college graduates in Singapore is about 15000 yuan, China is one to 1/3, and Malaysia and Indonesia are similar to China for college graduates, but lower labor costs are lower than that of China.

In general, China's labor cost is the highest in comparison with other emerging Southeast Asian countries, followed by Malaysia, Thailand, Indonesia, Philippines, and then Vietnam, Kampuchea and Laos.

Lower cost is undoubtedly very attractive to the capital pursuing maximum profits.

"However, in the profit and loss statement of enterprises, labor costs account for only 5% of the total cost."

Pang Jinfeng said, "what is more important is the proportion of labor costs and output rates."

It is generally accepted that the quality and output of Chinese labourers are higher than those of newly emerging Southeast Asian countries.

Just like Japan, Korea and other East Asian countries, the collectivist national character of Chinese people determines that it is more suitable for manufacturing industry. At the same time, after twenty years of development, Chinese workers are much more proficient than those emerging economies in Southeast Asia.

According to Pang Jinfeng, Adidas has a group of Chinese technology backbone in Vietnam's factory, and has been sent to Vietnam as a technical guidance to ensure its operation in Vietnam.

Apart from the difference in output rate, these Southeast Asian countries have their own special situations.

Vietnam has strong trade unions. There are more than one union in a factory, and workers have a strong sense of rights and interests protection. In Thailand, workers need 40 minutes of praying time within the working hours. In addition, every factory area has to set up Buddha statues and prayer areas. But in the company's cost statement, it is only labor costs. These factors can not be reflected.

"Capital relocation is a very natural thing. It does not mean that multinational companies are no longer optimistic about China. China is also experiencing developed countries, and Southeast Asian countries will also experience it in the future."

Galaxy Securities researcher Liu Juanxiu said.

How long can a country's low labor cost last? "Usually 20 years."

Pang Jinfeng said.

But losing the low labor force does not mean that it will lose its attraction to capital.

Apart from the competitiveness of the labor force, China has another obvious advantage: the huge domestic consumer market.

Be congenitally deficient

Rapid development of emerging Asian countries such as Indonesia and Thailand

Growth is indeed eye-catching, and some investors hope that the rapid urbanization wave of these countries can promote the price of some commodities falling due to the slowdown of China's economy. But the chief executive of China Institute of International Studies and many executives of foreign banks believe that this hope is likely to fail. The strong growth of new Asian countries will not produce the pulling effect of China in the past more than 10 years.

Qu Xing believes that China's attraction to foreign investment is still strong.

"China's vast domestic market provides a certain protection for foreign investment in China's investment return, while the domestic market in Southeast Asian countries is relatively small, and the dependence on overseas markets will lead to higher risks for enterprises."

Qu Xing said.

In fact, many foreign enterprises only invest in China when they look at the Chinese market.

Cabot, the world's largest carbon black company, will set up a new plant in Xingtai and other places this year, and its capacity will all target China's domestic market.

Pang Jinfeng believes that China does not have to worry too much about the relocation of some enterprises. "Southeast Asian countries have congenital defects: the small domestic market makes their inherent market insufficient to digest the output of low cost. Once the supply chain breaks down, enterprises will face a huge risk."

He believes that as long as China continues to maintain the current domestic market growth rate and promote industrial upgrading, there will not be a problem of manufacturing industry hollowing out caused by the massive relocation of multinational enterprises.

Another risk comes from labor resources.

Although the population structure of these countries is younger, the population base determines the amount of labor they can provide for enterprises.

The total population of the newly emerging Southeast Asian countries is close to 700 million.

Pang Jinfeng said that in Vietnam's two largest cities, the average wage in Hanoi and Hu Zhiming has increased by 20% over the past year.

The influx of foreign capital and the shortage of high-quality labor force have led to "talent inflation".

Although this speed will gradually decrease, it also shows the country's ability to absorb foreign capital.

The limited economic scale determines that its demand for commodities is hard to grow.

According to reports, from the consumption of copper, the total consumption of new East Asian countries excluding China last year was 2 million tons, while Latin America consumed 685 thousand tons.

The two add up is only slightly higher than China's 7 million 600 thousand ton consumption of 1/3.

Although India is quite similar to China in terms of economic scale, India's economy is biased towards services, and its demand for bulk commodities is far from that of China.

According to the figures released by the international iron and Steel Association, India's per capita crude steel consumption in 2010 was only 56.3 kilograms, far lower than China's 445.2 kilograms.

"China's economies of scale, its ability to absorb foreign capital and its ability to resist risks are not available to those countries, and the inflow of foreign capital will stimulate economic growth of these countries to a certain extent, but it does not necessarily lead to the formation of these countries' Take-off momentum in the year."

Qu Xing said.