Will China lose ‘world’s factory’ tag?

Will China lose ‘world’s factory’ tag?

Article

1.   Paran Balakrishnan talks about recent US tariff sanctions on Chinese products and how it could affect the whole Asia in both positive and negative manner.
2.   US President Donald Trump has authorized a new round of tariffs on an additional $200 billion of Chinese goods, bringing the total to $250 billion.

Important Analyses

3.  The trade dispute between the US and China continues.

Impact on China

4.  Companies like Adidas and Nike have been shifting their production base from China.
5.  U.S.’s tariffs have given a series blow to many US companies producing in China.
6.  Hi-tech products exported to US from China made by US companies is also getting affected.
7.  Other reasons which are going against China are increase in wages and rise of rents in industrial areas.
8.  Still China isn’t about to lose its status of world’s factory soon as China’s formal manufacturing sector is estimated to employ 120 million workers.

Impact of Vietnam

9.   Vietnam position’s right now is where China was about 10-15 years back.
10. Adidas has cut over 40% of its shoes production in China.
11. Similarly, Nike, Samsung, Camera maker Olympus, etc. have also moved to Vietnam.
12. Even many Chinese companies are now looking to shift production there.

13.Factors in favour of Vietnam

• Geography plays well for Vietnam as it is close to Korea as well as China.
• Political stability in Vietnam
• Educated and young workforce

Impact on Indonesia

14.   Indonesia is also attracting companies because:

• Indonesia has a 2050-million population.
• Start-ups are emerging
• e-commerce is taking off

Impact on India

15.   Companies like Facebook, Google, Apple, Samsung, etc. are keen to invest in India because of young workforce, rising middle-income class, etc.
16.   US’s tariff on Chinese products could make Indian machinery, electrical equipment, vehicles, transport parts, and chemicals, etc. more competitive in the US market.
17.   India’s vast internal market is also playing in its favour.