South East Asia Amongst the Top Five Locations Favoured by Global Manufacturers

  • Malaysia, Vietnam and Indonesia dominated the top five locations globally for labour intensive manufacturing
  • Singapore is #5 in terms of a favourable geo-political climate and intellectual property protection, United States is top
  • European production lines, and the free flow of goods, potentially threatened by ‘no-deal’ Brexit

Singapore, 25 April 2019 - Global real estate services firm Cushman & Wakefield has today published new research assessing 48 of the most suitable locations for global manufacturers to expand or relocate their operations in EMEA, the Americas and Asia-Pacific. While manufacturers’ individual requirements will vary, China performs strongly thanks to increasing Government investment in the adoption of technology, while the United States is most attractive for those seeking to minimise exposure to economic and political threats.

No.

Baseline

Cost

Risk

1

China

China

United States

2

United States

Malaysia

Canada

3

India

Vietnam

Czech Republic

4

Canada c

Indonesia

China

5

Czech Republic

India

Singapore

6

Poland

Thailand

Germany

7

Malaysia

Lithuania

Denmark

8

Lithuania

Romania

Finland

9

Hungary

Sri Lanka

Austria

10

Thailand

Poland

United Kingdom

11

Romania

Mexico

Ireland

12

Portugal

Peru

Portugal

13

Indonesia

Czech Republic

Poland

14

Singapore

Russian Federation

Japan

15

Vietnam

Philippines

Switzerland

16

Mexico

Columbia

Lithuania

17

Bulgaria

Hungary

Australia

18

Turkey

Turkey

Netherlands

19

Republic of Korea

Bulgaria

Slovakia

20

Colombia

Morocco

Republic of Korea

Cushman & Wakefield’s Manufacturing Risk Index (MRI) scores each country against 20 variables that make up 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.

The report reveals that China is the leading country when viewed from a baseline scenario which gives equal importance to a country’s operating conditions and cost competitiveness. The United States is in second place followed by India, Canada and Czech Republic making the top five. The Czech Republic is the highest ranked European country with Poland, Lithuania and Hungary also featuring highly.

When the data is analysed from a cost scenario - which gives a higher score to countries where operating outlay, including labour costs, is lower - China remains on top with Asian countries dominating the top 10. Only Lithuania and Romania, in seventh and eighth respectively, feature prominently from elsewhere.

The third ranking - the ‘risk’ scenario - takes into account rising geopolitical risk by favouring countries with lower levels of economic and political threat. In this scenario, North America leads the way with the US and Canada first and second respectively and China slipping to fourth. European locations account for more than half the top 10, led by the Czech Republic, which places third in the index, with Germany, Denmark, Finland, Austria and the United Kingdom also featuring in the top 10.

Report author Lisa Graham, Cushman & Wakefield’s EMEA Head of Logistics and Industrial Research & Insight, said: “These rankings provide a critical insight into the rapidly-evolving manufacturing landscape and the decision-making factors behind locations. Global manufacturing has entered a new era, marked by the growing influence of technology in addressing productivity, labour shortages and safety in production and logistics.

“We are seeing formerly low-cost locations such as China and India moving up through the value production chain through country-sponsored support of technological adoption. That is why Asian countries featured so prominently in our rankings. There are still concerns over intellectual property issues in the region which mean, that despite higher costs, countries in North America and Europe will continue to thrive as manufacturing bases.”


Asia Pacific markets in top five locations

Asia Pacific dominates the top five locations globally under the Cost scenario, with emerging Asian markets such as Malaysia, Vietnam and Indonesia offering cost-competitive alternatives. Under the geopolitical risk scenario, Singapore, Japan and Australia offer alternatives in the top 20 global locations.

Christine Li, Head of Research for Singapore and South East Asia said, “While China remains a global manufacturing powerhouse, the US-China trade tension was a wake-up call for many global companies to seriously consider supply chain diversification into other low-cost alternatives in countries such as Vietnam and Indonesia. The ranking of Vietnam and Indonesia in the Manufacturing Risk Index continues to leapfrog as they both emerged as a clear winner from the trade tension.

Singapore will also be a key beneficiary in the transition to Industry 4.0 as the city-state continues to invest heavily in technology and innovation to keep pace with the rapid transformation in manufacturing. Singapore’s robust regulatory framework offer manufacturers a reasonable level of protection from geopolitical and intellectual property risks”

Vietnam moved up 8 spots from 23 in 2018 to 15 in 2019. Ranking of Indonesia also rose by 7 spots from 20 in 2018 to 13 in 2019. This is also evident that the emerging SEA markets such as Malaysia, Vietnam and Indonesia dominated the top 5 locations globally under the Cost scenario.

The rankings also reflect an element of protectionism and nationalism putting global and regional and supply chains at risk. In Europe, the outcome of the ongoing Brexit negotiations will redefine regional production lines as well as reshape domestic and international flow of goods.

Countries which invest in platforms that facilitate flows in and out of production lines will succeed. China’s seamless supply chain connections have resulted in substantial investment in infrastructure and multi- modal transport, including the New Silk Road rail and maritime projects, in addition to incentives. These factors are off-setting concerns regarding intellectual property.

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For Further Information Contact:

Christine Li
Head of Research, Singapore, SEA
christineli.mw@cushwake.com


Geraldine Cheong
Associate Director, Communications Singapore, SEA,
geraldine.cheong@cushwake.com

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 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 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.