Insights into the New Manufacturing Locations

Selected business news articles on global production

Companies in Asia-Pacific emerging economies plan to implement bigger salary increases in 2017, with India and Vietnam likely to register the highest salary upgrades of 10% and 9.2%, respectively. This reflects both the high premiums offered persons with the right skills and a continued high rate of growth in the region forecast to reach 4.2% next year.

BusinessWorld | 14 December 2016

The Indian government needs to integrate robotics as a key component of its flagship Make in India programme for attracting global manufacturers to set up their highly efficient and automated supply chain facilities in the country. With several global auto firms hoping to export vehicles from India, both vehicle assembly and suppliers of components depend on extensive automation to be at par with international standards.

Business Standard | 8 December 2016

Thailand has a strong manufacturing base but faces challenges from lower-cost manufacturing countries. To avoid competition from low-cost labour and to achieve mass customization in manufacturing and marketing, companies must shift towards full automation and digital transformation. This requires, in turn, a greater availability of data scientists and analysts.

Bangkok Post | 22 November 2016

Efforts by Taiwanese machine tool makers to utilize smart manufacturing technologies are in line with the government’s plan to transform the country into a global manufacturing hub for intelligent machinery and are necessary as industry members increasingly face threats from regional competitors.

Taiwan Today | 19 October 2016

As manufacturing wages rise in China and poor worker welfare standards continue to plague many lower cost Asian countries, Western brands have started seeking alternative sourcing hubs. Africa is seen by some as the next frontier and, alongside players like South Africa, Kenya and Mauritius, Ethiopia is considered one of the most promising fashion manufacturing centres on the continent.

The Business of Fashion | 17 October 2016

Thailand’s robotics drive

Thai investment in robotics and automation is rising steadily, being part of a government-supported "Industry 4.0" drive. Between 2015 and 2018, imports of industrial robots are predicted to jump by 133 per cent, led by the automotive and electroncis industries. In addition, the country wants to build a domestic robotics industry with an employment of 15 000 in 2018.

PACE, Process & Control Engineering | 22 August 2016

South Africa takes hit in global manufacturing competitiveness

According to the Deloitte 2016 Global Manufacturing Competitiveness Index, South Africa remains the most competitive country in Africa. However, the country is losing momentum when compared to the global leaders, reflecting the growing importance of the adoption of advanced technology in driving competitiveness.

CAPE Business News | 11 August 2016

Taiwan: Innovation supply chain

Taiwan sets its sights on becoming a global hub of tech entrepreneurship and Internat-of-Things R&D. The government initiative includes a raft of measures to boost domestic innovation and international collaboration on cutting-edge technologies and applications. The objective is to re-position Taiwan as a flexible, responsive manufacturing center that can churn out small batches of tailor-made products in a short period of time before the items enter the mass production phase.

TAIWAN TODAY | 1 July 2016

Why Make-in-India must re-tool manufacturing

The trade-off between automation and labour is shifting dramatically, implying that low-cost manufacturing will not be enough for competitiveness in international markets. Instead, cost advantages must be combined with the latest digital technologies, allowing for higher customerization and smaller-scale production systems to become viable.

THE FINANCIAL EXPRESS | 28 June 2016

ZF, the German automotive parts manufacturer, is to reinforce its Indian supplier base and position India as a major sourcing hub on a global scale. The company will look at opportunities in the fields of castings, forgings and stampings while going forward with value added products and assemblies.

AUTOCAR professional | 10 June 2016

The opening of Adidas’s first factory in Germany in more than 30 years is one of the most visible examples of global brands bringing manufacturing home because of rising labor costs in Asia. Moreover, consumers want new styles or unique products quickly, forcing suppliers to rethink how their goods are made.

The Wall Street Journal | 9 June 2016

The central government is concerned about losses of low-end manufacturers to other countries and so is giving them incentives to move to lower-cost parts of China. But at the same time, it wants to raise wages and spur consumer demand by developing more high-tech manufacturing, such as robotics and semiconductors.

The Wall Street Journal | 7 June 2016

More than 60 Vietnamese manufacturers are today part of Samsung’s supply chain. The suppliers are assisted by Samsung’s experts to improve their production processes and meet Samsung’s quality criteria. The CEO of one company claims that "our production has alrerady increased by 30 percent and we will keep improving to meet Samsung’s expectations of 50 percent productivity growth in the future”.

VietNamNet Bridge | 29 May 2016

In less than two years, around two dozen new smartphone assembling units have been established in India. In a near future, India is expected to enter the ”completely knocked down” and component manufacturing era – and to cater to the demand of other markets in the Asia-Pacific region.

ZDNet | 26 May 2016

With Africa’s population expected to double by 2050, there is a dramatic need for employment. The continent has no alternative to developing a strong value-added manufacturing base. Africa has considerable opportunities to grow its manufacturing base in a broad range of industries, but a number of challenges need to be overcome.

CNBC Africa | 23 May 2016

Indian manufacturing lacks logistics

The state of India’s manufacturing sector is concerning. Especially when compared to the massive transformation registered in this sector by other Asian countries in similar stages of development. Contributing around 16 per cent of India's GDP, manufacturing remains far below its potential, which should be at least 25 per cent.

East Asian Forum | 28 April 2016

China is building a robot army of model workers

Countless manufacturers in China are planning to transform their production processes using robotics and automation at an unprecedented scale. In some ways, they do not have a choice. Human labor in China is no longer as cheap as it once was, especially compared with labor in rival manufacturing hubs growing quickly in Asia.

MIT Technology Review | 26 April 2016

Is Vietnam ready to reap the benefits of TPP?

Vietnam's textile and clothing sector is expected to be one of the biggest beneficiaries of the recently-agreed Trans-Pacific Partnership (TPP) free trade pact. But some industry observers are questioning whether the Southeast Asian country is ready to reap the benefits once the deal goes live.

just-style.com | 18 March 2016

India continues to be a strategic global sourcing hub for GE

In line with the 'Make in India' initiative, GE has been at the forefront by making India a global sourcing hub. According to the CEO of GE South Asia, "India has been a growth driver for sourcing and supply chain for GE over the last five years and we are confident of seeing the trend continue.

Equity Bulls | 17 March 2016

In 2015, Indonesia was the second-largest auto producer in the Asean region after Thailand. But in terms of production output, policy development, and improvements in infrastructure, Indonesia continues to increase capacity, domestic consumption and export volumes.

The Nation | 14 March 2016

In the changing global supply chain, there is no 'shore' thing

Offshoring, reshoring, nearshoring — we are in the midst of a major restructuring of global supply chains. In region after region, companies are asking the questions: Do we have the right structure? Do we have the right sourcing locations? Are we bringing our product to market in the most effective way?

Knowledge@Wharton | 3 March 2016

Adidas to beat sourcing costs by upping efficiency

To beat expected increases in sourcing expenses, Adidas Group continue to work on further increasing its production efficiencies. The focus is on: product and materials, supply base and allocation, and productivity improvements.

Fibre2Fashion | 14 December 2015

Offshore outsourcing has become an important strategy to lower production cost among Western firms. But this practice has some risks, one of which is the phenomen of value chain climbing: Suppliers in emerging markets can develop capabilities by supplying, with aspirations to compete with buyers in the product market. According to research by the University of Michigan, this competition often occurs in the more lucrative part of the global value chain controlled by the buyer.

Material Handling & Logistics (MH&L) | 17 November 2015

In a survey by EY, a global consultancy, India has been ranked as the most attractive investment destination for the next three years, followed by China, Southeast Asia and Brazil. The study brings out India’s current emphasis on manufacturing. Also, it reflects gains in perception in key areas such as macroeconomic stability, FDI policy, and efforts to ease doing business. A Department of Industrial and Promotion (DIPP) spokesman claims that ”we continue to attract investments across and it is important that India becomes a part of the global supply chain”.

Firstpost | 14 October 2015

Based on a survey of the headcount plans of 600 companies, SCM World, a supply chain think-tank, concludes that more jobs are to be created in China than anywhere else in the world. However, when the numbers of new jobs are related to those to be shed, China is far outstripped by India, Vietnam and Mexico. Compared with the top countries in terms of the ratio of new jobs to jobs shed, Mexico has key advantages that the Asian countries cannot copy: its proximity to, and integration with, the US.

FT.com | 9 October 2015

India has the potential to play a dominant role in the global specialty industry, considerng its skilled human resources and big domestic consumer market. Realising the importance of manufacturing to provide sustainable livelihood to a growing population, India’s new government is taking steps to support the development of up-stream supplier industries. According to the Department of Chemicals and Petrochemicals (DCPC), ”the chemical industry is a key enabler for other industries”. From 2009 to 2013, however, net chemicals imports have grown at about 20 percent CAGR.

Business Standard | 7 October 2015

Japanese automakers are stepping up development activities in Thailand as they see the Southeast Asian country as key to their success in emerging markets. They also seek to make their local development centers more autonomous. Yet a major challenge lies in securing the necessary personnel. According to one automotive executive, there are not so many competent science and technology personnel in Thailand in the first place. Competition for such personnel with Western and Chinese makers is also increasing.

Nikkei Asian Review | 7 October 2015

Over the past decade, Mexico’s manufacturing output has steadily increased, especially in the automotive, auto parts and electronic sectors. And yet, Mexico ranks only 64 of 148 countries in terms of infrastructure in the Global Competitiveness Index of the World Economic Forum. Economists agree that Mexico’s prospects for becoming a truly industrial economy will remain limited unless the country accelerates its construction of the roads, railroads, ports, energy plants and other physical infrastructure essential in any modern industrial economy.

Knowledge@Wharton | 8 September 2015

Companies from developing countries such as Brazil, India, China and Mexico are increasingly becoming global leaders and eclipsing familiar brands in the developed world. This trend is being fueled by the growth of emerging markets themselves. But, for emerging multinationals to succeed on a global scale, innovation is a major factor. Being born in environments in which it is difficult to innovate, companies learn how to become competitive with few resources – offering unique product and process development opportunities over the long run.

Knowledge@Wharton | 30 July 2015

In May (2015), the Chinese government released "Made in China 2025" – a plan to transform China from a manufacturing giant into a world manufacturing power. As Chinese wages have risen significantly, being now the highest in developing Asia, other countries are stepping up their efforts to compete for manufacturing jobs. If China is to avoid getting squeezed between cheap-labor emerging economies and those with more advanced technology, it needs to upgrade its industry – to marshal resources to research and development, and promote cutting-edge products.

Quartz | 28 July 2015

With the rise of manufacturing wages in China as a game-changing trend, a study by Standard Chartered concludes that the country is set to shed much of its low-cost manufacturing. From this relocation of low-cost work, driven mainly by foreign companies searching out new locations, India and the Asean nations will benefit, with Bangladesh and Africa also playing a role. But this is not synonymous with a decline in the China-led global supply chain – which will continue to thrive, being driven more by increasing diversification of Chinese investment abroad than by foreign investment into China.

FT.com | 29 May 2015

As labor costs rise in China and other emerging markets, it is commonplace to argue that the advantages of lower wages will recede.  But new research at Wharton and Stanford shows that the reality is more complicated. By and large, there is little reshoring on a net basis in the U.S. Instead, there is an unprecedented amount of restructuring going on. Companies are found to be making decisions on "how" and "where"  to manufacture products for a wide variety of reasons, giving rise to "a very complicated picture".

Knowledge@Wharton | 5 May 2015

There is a concern across central and eastern Europe that a competitive advantage based on low manufacturing and labour costs is being eroded by rising prosperity. Countries reliant on cost-competitive labour generally struggle to make the transition to a high-income country. According to the European Investment Bank, "Poland is clearly moving into this middle-income trough. What Polish companies need to do is to focus on innovation across all sectors – not enough is going on today".

FT.com | 23 March 2015

China's ascent as a leading industrial economy has forged supply chains that reach deep into South-East Asia. This "Factory Asia" now makes almost half the world's goods. And despite rising wages, China's grip is tightening. Low-cost work that does leave China goes mainly to South-East Asia, only reinforcing Factory Asia's dominance. That raises questions for emerging markets outside China's orbit. From India to Africa and South America, the tricky task of getting rich has become harder.

The Economist | 14 March 2015

After suffering an exodus of manufacturing companies to China 2000-2010, Mexico's star has been rising again as destination for US companies "reshoring" into the Americas, as Chinese labour costs have increased. But wages are only part of the picture. Being able to service the US faster and cheaper is a major advantage. However, Mexico also faces challenges – its supply chains remain less developed than those in China.

FT.com | 3 March 2015

Cheap designs and the assembly processes of Chinese partners are helping homegrown smartphone makers in southeast Asia take large shares of their domestic markets from foreign rivals such as Samsung. Their increasing clout rests on superior market expertise and an ability to exploit local connections. In markets, where the distribution network can be difficult to figure out, local contacts and knowledge of the market can play a big role.

FT.com | 30 December 2014

As manufacturing costs in low-cost countries have increased, there has been much discussion assessing whether it makes sense to re-shore production. However, many of the cases  have involved large companies. Mid-market companies face unique challenges and risks. These companies are seeking long-term competitive advantage. Far from a quick fix to the bottom line, offshoring and outsourcing often require much more time, more management oversight, and a more nuanced approach than most companies realize when they first embark on these initiatives.

IndustryWeek | 14 October 2014

As an early emerging market investor in eastern Europe, Tata Consultancy Services established a major information technology centre in Budapest in 2001. The motivation was to tap the local engineering talent pool, not just for European markets but also for use with global customers. Later, Chinese companies in the chemical and machinery industries have ventured into central and eastern Europe (CEE). By contrast, investments in the opposite direction – from CEE to markets outside the region – have remained rare.

FT.com | 29 April 2014

Mexico's free-trade agreements with 44 countries – most of them entered into since NAFTA was set up – add to the attraction of expanding supply chains in the region. According to a Washington think-tank, advanced manufacturing industries, including aerospace, pharmaceuticals and computers, are all spreading their supply chains across North America. While the most high-tech industries will remain in the United States for a while, even advanced technologies like 3D printing will have a role in Mexico.

The Economist | 4 January 2014