We’re seeing a new trend in global manufacturing—companies moving away from China in search of more favorable business environments in other Asian countries and other locations in the world. They’re shifting operations as China succumbs to several economic and political pressures.

8 Manufacturing Countries Alternative to China

Previously, a massive labor pool, low wages, and robust infrastructure served as China’s edge over other manufacturing countries. Now that China has decided to increase worker’s wages, companies are considering moving to other locations which offer inexpensive labor.

Rising fuel costs and increased consumer demand for same-day shipping make it impractical to transport goods across the ocean that they find it imperative to look for cost-effective solutions apart from China.

Aside from these, political pressures such as the tariffs imposed by the US and financial incentives offered by countries like Japan in exchange for reshoring are enticing manufacturing companies to look for alternatives closer to home or elsewhere.

Add the Covid-19 pandemic and its impact to supply chains across the world and companies are all the more convinced that moving out of China can help them address consumer demands and protect their workers from the virus.

All these factors combine to challenges, China’s position as the world’s factory has a great effect. Several countries are now trying to step up their manufacturing capabilities to become the next global production giant.

 Alternative Countries

Manufacturing companies in search of a favorable business environment can consider the following countries as alternatives to China.

They may even find it feasible to move production to several locations to simultaneously produce quality products that are found in nonotmadeinchina.com.

Exploring the following can help manufacturing companies lessen disruptions in their supply chain and help them address increasing product demands from all over the world.

1. India

India provides a favorable business environment for manufacturing. Prime Minister Narendra Modi’s platform ‘Made in India’ aims to put India on the world manufacturing map and achieve global recognition to the Indian economy.

It’s giving a 6% incentive for companies producing goods in India. It appears to be an effective strategy, as mobile phones, luxury, and automotive brands have established manufacturing outlets in the country.

In order to achieve its aim to become the next manufacturing powerhouse, India needs to enhance its infrastructure and invest in education and workforce development.

2. Japan

Japan is most known for its electronics and automotive industry and for producing high-quality and durable products. Japan is the third-largest manufacturing country in the world and they rely on technology rather than labor-intensive production.

Aside from using sophisticated technology, they also employ economic subsidies to boost their manufacturing sector.

In March 2020, Prime Minister Shinzo Abe announced that it would provide a subsidy for reshoring efforts that would bring production back home or to other Southeast Asian countries.

Several sectors benefitted from this stimulus and it serves as an attractive offer for companies to consider Japan rather than China for production.

3. Mexico

Mexico offers a strategic location for US and Canada-based companies who are contemplating their move away from China. Its close proximity to its big-time neighbors and its partnership with the two in the USMCA (United States-Mexico-Canada Agreement) lessens production costs.

Aside from this, Mexican labor is lower by 33.5% compared to China and its close proximity to the US and Canada can also decrease delivery times.

Investing in Mexico’s production line also creates more jobs, which can help government efforts in reducing the illegal entry of migrants to Canada and the US.

4. Thailand

Thailand can also step up to global manufacturing demands due to its strong automotive, chemicals, electronics, and food industries.

It also boasts of a stable economy and well-developed roads and airways. The country also offers investment incentives for businesses engaged in medium and high-end manufacturing.

5. Taiwan

Taiwan is often referred to as the “Silicon Valley of the Orient” because it’s home to leading technology companies.

Their technology sector is among the best in the region and in the world and products are of better quality than those made in China. Taiwan is also a favorable reshoring option since factories are close to major shipping ports and major logistics companies.

6. Singapore

Singapore’s stable economic growth along with liberal trade and investment policies make it a considerable option for relocating manufacturing outside China.

Singapore’s most recent initiative includes catering to advanced manufacturing and product innovation. They plan to attract younger Singaporeans to fuel their goal of reaching a 50% increase in manufacturing outputs in the next 10 years.

Investment in employee education and machine efficiency makes Singapore an amenable candidate for global manufacturing.

7. South Korea

South Korea is home to top automotive brands. Its advantages include a strategic location between China and Japan, two major Asian markets.

It has an efficient logistics chain and a steady supply of raw materials, components, and other semi-assembled products. Factories are also close to major ports and they offer mid to high-end manufacturing services at competitive prices.

8. Vietnam

Vietnam is benefitting from reshoring efforts and is showing the fastest manufacturing growth rate in the region. It also boasts of low wages and a thriving manufacturing industry.

Its stable political environment serves as its advantage along with an evolving infrastructure. Vietnam exports food and beverages, footwear, different kinds of machinery, clothing, and textile.

It has also ventured into technology, with Apple announcing in May 2020 that it would utilize facilities in Vietnam to produce AirPods.

Conclusion

Rising labor and fuel costs, as well as economic and political pressures, affect China’s position as the world’s largest factory. Manufacturing companies are now considering moving out of China into other locations in Asia and North America in search of more favorable business environments.

These companies implement reshoring initiatives, in which operations are either brought back to their home base or transferred to other locations that offer low wages and well-developed infrastructures.

The eight countries mentioned above prove to be favorable alternatives to replace China as the leading manufacturing country in the world.

They present several advantages such as government incentives, non-restrictive trade, investment policies, and infrastructure that provide a favorable business environment.

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