How realistic is the separation of countries from the "world factory" of China?
Tashkent, Uzbekistan (UzDaily.com) -- Most experts note that countries that seek to localize production are faced with the question of how realistic it is to separate from the “world factory” of China.
Some countries are counting on the transfer of industrial capacities from the PRC to their territory, taking into account the following factors:
1) the rise in labor costs in China compared to other countries in Asia;
2) non-compliance by Chinese manufacturers with the requirements of environmental standards and intellectual property laws;
3) uncertainty in the result of the growing trade war between the United States and China.
However, according to experts, rapid and massive localization or regionalization of supply chains with the subsequent complete exclusion of China will not work.
First, relocating production and rebuilding supply chains is not only extremely difficult and time consuming, but also very expensive. In addition, developing countries in Southeast Asia, as Indonesia, Thailand, and Vietnam continue to depend on Chinese resources and raw materials, thus raising doubts about their overall reliability as trading partners. In addition, these countries have important infrastructural constraints compared to the PRC.
Secondly, the size of the economy of these countries and the number of the population is smaller than in China. Many companies want to continue manufacturing in China because their physical presence there provides direct access to 1.4 billion consumers.
In general, Beijing adopted the Made in China 2025 program back in 2015 with the aim of developing high-tech industries, moving away from technological dependence on other states and achieving leadership in global markets. China is trying to move away from the dependence of the economy on resource extraction, cheap labor, and the production of consumer goods in the direction of creating products with high added value.