Southeast Asian countries have an unshakable competitive advantage
In recent years, Southeast Asian countries have attracted investment and transfer from many international brands by virtue of their advantages such as low cost, abundant human resources and geographical location. Some even believe that Southeast Asian countries will replace China as the new center of global manufacturing. However, this perception ignores the resilience and strength of China's manufacturing industry, as well as the challenges and dilemmas faced by Southeast Asian countries. This article will analyze the competitive advantages of China's manufacturing industry from the following aspects, as well as the limitations of the development of manufacturing in Southeast Asian countries.
The competitive advantage of China's manufacturing industry lies not only in its infrastructure and cost, but more importantly, in terms of technology research and development and industrial experience. The development of high-end manufacturing requires long-term research and development, technology accumulation and talent training, which is not achieved overnight. China used to be the place where many foreign brands were produced, and the quality of their products was widely recognized, but when these brands relocated their production lines to Southeast Asia, the quality of the products went up and down. From clothing to shoes to digital accessories, this change is thought-provoking. This shows that the technology and experience of China's manufacturing industry are difficult to replicate in Southeast Asian countries.
Another competitive advantage of China's manufacturing industry is its well-established industrial chain and strong R&D capabilities. China has the most complete industrial chain in the world, from raw materials to parts and components, and then to finished products, all of which can be completed in China. This makes China's manufacturing industry have an efficient production process and flexible adaptability. At the same time, China has also demonstrated strong R&D capabilities in emerging fields such as artificial intelligence, 5G, and new energy, and has continuously launched innovative products and services, enhancing the added value and competitiveness of China's manufacturing industry.
Although Southeast Asian countries have achieved some success in attracting foreign investment, they still face numerous challenges. Issues such as the global economic recession, commodity political conflicts, and repeated epidemics have put unprecedented pressure on these countries. This has led to rising production costs, unstable production capacity, and risks for international brand chains. For example, countries such as Vietnam and India both saw a precipitous order cliff** in the first half of 2023, resulting in significant inventory backlogs and factory shutdowns. The development of the manufacturing industry in these countries has been severely affected.
On the other hand, the development of the manufacturing industry in Southeast Asian countries is also constrained by the lack of its industrial structure and technical level. The manufacturing industry in these countries is mainly concentrated in low-end and labor-intensive fields, and there is a lack of high-end and technology-intensive industries. This makes it difficult for their manufacturing industry to lack added value and competitiveness, and it is difficult to cope with changes in the market and the upgrading of demand. At the same time, the technological level and R&D capabilities of these countries are also relatively backward, and it is difficult to keep up with the pace of innovation and development of the global manufacturing industry.
To sum up, the competitive advantage of China's manufacturing industry is difficult for Southeast Asian countries to shake. China's manufacturing industry continues to maintain a leading position in the global manufacturing industry with its technology R&D and industrial experience, as well as a well-established industrial chain and strong R&D capabilities. Many brands are rethinking their global chain strategy, and some are even choosing to move production lines back to China from Southeast Asia. This proves that it is not enough to rely on low costs, but also to have a stable chain, high-quality products and efficient production processes. Despite Southeast Asian countries' emergence on the global economic stage, they still have a long way to go. With years of accumulation and experience, China still occupies an unshakable position in the field of manufacturing. As a result, the competitiveness of China's manufacturing sector remains strong, and its position in the global economy is unshakable.