First, the real cost of investment in Southeast Asia is not low
Chemical enterprises in Southeast Asia investment development, nothing but low labor costs and loose investment policy environment. According to the survey, the monthly salary of ordinary operators in Southeast Asia is about 2000 yuan, and that of Chinese workers is about 8000 yuan, a difference of about 300%.
On the surface, Southeast Asian countries have a big cost gap compared with China, but there are also many hidden costs, such as monthly tips for workers, bilingual training fees, and public relations fees for local governments. The cost of training a qualified operator in a non-native country is about twice the cost of training in China. Overall, South-East Asia's costs are actually much higher than they appear.
Second, Southeast Asia is the "subsidiary" processing plant of Europe, and the decline of European consumption has a great impact on Southeast Asia
It is true that Europe is one of the most restrictive regions in the world in terms of chemical consumption, and that is why there is a high profit range in the consumption of chemicals and products in Europe. However, in the context of the energy crisis in Europe caused by the Russia-Ukraine war, the rise of chemical prices in Europe is more about the suppression of the consumer market and the huge arbitrage of imported goods, which itself is the embodiment of the contradiction.
Most of the plastic products processed by the manufacturing industry in Southeast Asia flow to Europe for digestion, and more concentrated in low-end plastic products, high-end plastic products are mainly processed by the manufacturing industry in China. With consumption levels falling due to the energy crisis in Europe, the consumption of high-end plastic products is expected to drop sharply, while relatively low-end plastic products made in Southeast Asia are correspondingly competitive in terms of cost and summative ratio.
But how long can this continue? It is a global general trend that the energy crisis in Europe has been relieved and the consumer market upgrade has driven the development of high-end consumer goods. The consumer market of Southeast Asian plastic products in Europe may maintain a limited operating space.
3. Can Southeast Asia complete the fifth wave of global manufacturing shift?
The world's first manufacturing profession was from the 19th century to the early 20th century, with the invention of the British steam engine, which made Britain the world's most important manufacturing center. In the 1930s, the second Industrial Revolution led to a boom in the United States, which also became the world's first great migration of manufacturing from Britain to the United States. This shift in manufacturing is more driven by technology.
In the 1950s, after World War II, Germany and Japan recovered one after another with the support of the United States, and their rich manufacturing base enabled them to grab more manufacturing orders, among which Germany focused more on machinery manufacturing, while Japan chose to develop electronics industry. It is also the second great shift in global manufacturing, one driven more by geopolitical considerations.
In the 1960s and 1970s, labor costs soared in Germany and Japan, which could not meet the requirements of local manufacturing. As a result, there was a third great shift of manufacturing from Germany and Japan to the four Asian Tigers. Brother Pingtou believes that this shift in manufacturing is more driven by labor costs, and technology is less important in this process.
Around the 1990s, the four Asian Tigers also gradually entered the era of high labor costs and could not meet the requirements of local manufacturing, which led to the fourth great transfer of manufacturing from the four Asian Tigers to the mainland of China. According to Crew Head Brother, this is also the second manufacturing shift due to the increase in labor costs, and also the beginning of China's firm control of manufacturing.
After 2008, China's labor cost also saw a substantial increase. At present, low-end manufacturing is turning to Southeast Asia. Some chemical enterprises choose to build chemical equipment without technical threshold in Southeast Asia, more considering the low labor force in Southeast Asia. This may be another shift in the global manufacturing industry due to the increase in labor costs. However, this shift is more about the shift of low-end manufacturing industry, while high-end manufacturing industry is more dependent on the supply chain system, so there is no obvious shift phenomenon.
It can be seen from the previous several manufacturing transfer rules that the time cycle of manufacturing transfer is about 20 years. The recent several transfers are all caused by the mismatch between the rise of basic labor costs and the local manufacturing industry. It can be roughly considered that the period of labor cost advantage in a certain region is about 20 years. At the current stage of development, the cycle is likely to shorten.
The bigger question for South-East Asia is whether it can attract enough shifting industries, as it has in the past. From the point to the line to the surface, only in this way can form a real industrial transfer. Otherwise, the cost of investment after Southeast Asia will only increase, not decrease.
