china retains its top manufacturing hub position globally in terms of operating conditions and cost competitiveness
jul 16, 2020
china retains its top manufacturing hub position globally in terms of operating conditions and cost competitiveness
shanghai, july 15, 2020 – in its annual ranking of the most suitable locations for global manufacturing among 48 countries in europe, the americas and asia, cushman & wakefield has assessed that china remains the most attractive manufacturing hub globally from an operating conditions and cost competitiveness perspective.
the annual global manufacturing risk index (mri) scores each country against 20 variables that make up the three final weighted rankings which cover conditions, cost and risk. the data underpinning the mri comes from a variety of reliable sources, including the world bank, unctad and oxford economics.
baseline scenario
from a baseline scenario ranking that looks equally at operating conditions and cost competitiveness china retains the top spot, followed by the united states in second. diversification combined with a move up the value chain in order to focus on telecom, hi-tech (40% of robotics produced globally are made in china), and computers have helped the chinese manufacturing sector remain somewhat resilient in light of the various challenges facing the global economy.
cost scenario
the mri cost scenario places greater emphasis on cost reduction to give a higher score to countries where operating costs, including labor are lower. while china retains its lead position, vietnam and india jumped to second and third positions respectively.
“the manufacturing shift towards southeast asia has been a long time in the making. as minimum wages in china grew, more orders for labor intensive products, such as clothes, toys and shoes, shifted to less expensive locations in india, bangladesh, myanmar and vietnam,” said christine li, head of research, singapore and southeast asia, cushman & wakefield. “however, despite government initiatives to attract manufacturers by southeast asian countries, china retains a clear infrastructure advantage with the ability to efficiently move goods via road, rail or sea transport.”
the 2020 mri also includes analysis of the impact of covid-19 on the global manufacturing sector and ranked countries by their projected ability to restart their manufacturing sectors once confinement measures are relaxed and business starts to return to normal. this “bounce-back-ability” ranking is based on six key variables and is weighted according to its estimated contribution to manufacturing sector recovery. several countries in asia pacific including china, thailand, south korea, australia, and japan are assessed to be in the top quartile in terms of a fast recovery.
covid-19 and the resultant disruption in economic activity across the world has re-ignited the debate about the benefits of re-shoring. however feasible and desirable, reshoring on a mass scale is not realistic and will not happen in the immediate term. instead, to build resilience in the event of a second pandemic wave or second lockdown period, manufacturers are more likely to address the two most pressing vulnerabilities: materials and component sourcing and supply chain disruptions.
the most likely measures taken by manufacturers in reaction to the covid-19 pandemic are:
· immediate- to short-term: holding more product and component inventories.
· medium-term: diversifying component sourcing including an emphasis on localising or “nearshoring” components to be closer to plants while holding more inventories.
· long-term: reshoring for some sectors, locating plants and component sources closer to each other as well as supply chain and production line restructuring that would make just-in-time inventory management possible again
“the current pandemic leaves many unanswered questions as to what is in store for the global manufacturing sector,” said tony su, managing director, head of industrial & logistics property services, china, cushman & wakefield. “we’re optimistic about its future, but it will ultimately depend on the industry’s components that are currently flourishing, as well as those countries and manufacturers that are still operable during the current onset of new challenges.”
visit cushman & wakefield’s global website to download the report.
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about cushman & wakefield
cushman & wakefield (nyse: cwk) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. cushman & wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. across greater china, there are 22 offices servicing the local market. the company won four of the top awards in the euromoney survey 2017 and 2018 in the categories of overall, agency letting/sales, valuation and research in china. in 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. to learn more, visit www.cushmanwakefield.com or follow @cushwake on twitter.
for further information, please contact:
mandy qian
director, marketing & communications, greater china
tel: 86 10 8519 8040
mandy.qian@cushwake.com
