Sat, Nov 17, 2018 page12

• Vietnam top pick as firms leave China

  LACK OF APPEAL: Taiwan is not likely to benefit much from production relocation, as its labor is more expensive than in China and it has high manufacturing costs, ANZ said

  • By Crystal Hsu / Staff reporter
  • • 
    • 
    • 

  Vietnam is best placed to benefit from the diversion of investment out of China, while Thailand and Singapore are also likely key beneficiaries, Australia and New Zealand Banking Group Ltd (ANZ) said yesterday.

  The ongoing US-China trade spat has underlined the risk of concentrating production bases in a single country and is triggering supply chain reorganization, the bank said.

  Vietnam stands out as the best performer in terms of labor costs, capability, trade facilitation, political stability and existing operations or industrial clusters, ANZ said.

  A recent survey of US firms in China showed that one-third had either moved or were considering moving some production abroad amid the trade tensions, it said.

  A separate survey of foreign companies from other countries found that half were considering relocation and Southeast Asia was their top choice, ANZ said.

  Cheaper labor costs lend support to migration, and as a survey by the Japan External Trade Organization showed, the cost of hiring manufacturing industry workers in most Asian economies is lower than that in China, with Taiwan, Singapore and South Korea being the exceptions, ANZ said.

  The availability of a skilled labor force would also carry significant weight, especially for businesses operating in sectors higher up the value chain, it said.

  Singapore is the region’s strongest performer based on the World Economic Forum’s Global Human Capital Index, which ranks economies by education attainment, education quality, labor force participation and the availability of skilled employees, the bank said, adding that Vietnam and Indonesia are also in the top half of the list.

  A robust supply chain infrastructure, which enables cost-effective and timely delivery of products to customers, is important, ANZ said

  Singapore ranks high globally in the World Bank’s Logistics Performance Index, which grades economies on their customs efficiency, infrastructure, logistics services, timeliness, reliability and cost, the bank said.

  Taiwan, Thailand, Vietnam and Malaysia are not far behind China and are in the top 25 percent of countries graded on the index, it said.

  Participation in free-trade agreements (FTAs) would also add to an economy’s attractiveness as a production base as these pacts reduce or remove trade barriers, ANZ said.

  Singapore leads the pack with the number of FTAs is has secured, while Taiwan, the Philippines, Laos, Cambodia and Myanmar are lagging behind, ANZ said.

  The presence of existing industrial clusters would be a plus, as the bulk of the supporting infrastructure and networks would already be in place, the bank said.

  Vietnam’s political stability and improvements in its human capital and logistics network make it an increasingly attractive manufacturing hub, ANZ said, adding that Vietnam’s participation in major FTAs is also a big draw.

  A growing number of companies have announced plans to ramp up production in Vietnam or invest there, ANZ said.

  Samsung Electronics Co, which is Vietnam’s top foreign investor and contributes close to a quarter of the country’s exports, has signaled plans to further expand its business in Vietnam.

  Taiwan and South Korea are unlikely to benefit much from businesses relocating out of China because of their high manufacturing costs, ANZ said.

  However, their highly skilled workforces and focus on high value-added products could make them a viable alternative production base for US firms looking to circumvent high tariffs to service the Chinese market, the bank said.
• Most Popular

  • 1

    Bologna advance to face AC Milan in Coppa final

  • 2

    Wild’s top line too much for Vegas Golden Knights

  • 3

    Taiwan draws attention at World Expo

  • 4

    China turns on the charm for Taiwan businesses: study

  • 5

    Wolves hold off Lakers 116-104 to take series lead