Lower production costs, reduction of tariffs and competitive prices of raw materials are pushing Chinese companies to shift production to South-East Asia. According to a study by ANZ Bank economists that South-East Asia would take over from China to become the ?world?s factory? in the next 10-15 years. The Asean Economic Community, which is likely to come to fruition by end of the year, would see the emergence of a single market with free movement of goods, services, investments and skilled labour.
The economic zone, the report says, will connect the low-cost labour in Myanmar, Cambodia and Laos, cost-effective businesses in Thailand, Vietnam, Indonesia and the Philippines, and sophisticated manufacturers in Singapore and Malaysia.
Asean is China?s largest export destination for textiles since 2010. Imports of textile and apparels from Asean are also growing at a rapid rate of above 30 per cent every year. It is found that manufacturers in both China and Asean countries are complementing each other in the production chain, rather than competing with each other.
Many members of a Chinese chamber of commerce have expressed interest in establishing their presence in Asean countries. They agree that rising costs in China is the main factor that pushes them to seek options elsewhere, with the attractive policies by other countries as incentives.
China´s interests shift to ASEAN
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