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China +1: Four regions emerge as new manufacturing hubs

Bryan Chuang, Taipei; Julie Chang, DIGITIMES Asia 0

Credit: Pixabay

As the trade and tech conflicts between China and the US escalate, there's a burgeoning trend among international businesses to hedge their bets despite the large local market in China. Many companies are implementing a "China+1" risk diversification plan, looking beyond China for new regional manufacturing bases.

A recent study published by the Taiwan External Trade Development Council (TAITRA) on September 12 reveals that ASEAN, Central and Eastern Europe, India, and Mexico have risen to become the top four global manufacturing hubs, diminishing China's role in supply chains.

Taitra's study suggests that supply chain reconfiguration is far from over. This transformation not only encompasses tech industries such as EVs, automotive electronics, AI servers, and semiconductors, but also has a domino effect on adjacent sectors. Industries like aerospace, smart healthcare, and smart energy will witness an influx of new opportunities.

India

The electronics manufacturing industry is particularly fond of investing in India, according to Taitra. India's industrial ecosystem is enriched by not just its 1.4 billion local population but also 30 million international workers, offering an extensive network of human capital. The council believes that Foxconn and Pegatron will expand their operations greatly in India.

ASEAN

Within ASEAN, sectors like semiconductors, PCBs, and battery manufacturing are seeing robust investment. Despite the higher production costs, Thailand has become the world's third largest PCB manufacturing country, which stands to show how strong the global China+1 risk diversification tide is. Companies based in Taiwan have been increasing their investment in Thailand for the same reason.

Mexico

The fact that over 70% of multinational corporations still import raw materials from regions outside of Mexico have made companies put added pressure on suppliers to relocate to areas close to Mexico for decreased dependency on Asia, especially China. Mexico rose to become a regional manufacturing hub in recent years due to its demographic dividend and its proximity to the US.

Central and Eastern Europe

Central and Eastern Europe provides a competitive landscape in terms of labor and land costs compared to Western Europe. The region, predominantly focused on manufacturing, could seize the opportunity to grow its EV, key components, and other related industries.