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Southeast Asian sourcing locations gain as China loses low-cost advantage

Southeast Asian sourcing locations gain as China loses low-cost advantage

As China progresses from a low-cost manufacturer dependent on exports to a service-oriented economy driven more by domestic demand, wages there are rising. With increasing labor costs and an ageing workforce, China is losing its foothold as the world�s lowest cost manufacturer of consumer goods. Rising costs are forcing companies to take a closer look at new sourcing locations across Asia, according to a new report from KPMG International. Southeast Asian sourcing locations like Bangladesh, India, Indonesia and Vietnam maturing as regional integration and preferential trade terms take hold. A number of countries in South and Southeast Asia are set to benefit from this recent shift. While hard goods ranging from consumer electronics to furniture are still being sourced from China, apparel and footwear production is widely dispersed and more mobile across the Asia Pacific region (ASPAC). Clusters of specialized production are emerging, such as footwear in Indonesia and Vietnam and hand stitched fabrics and metalware in India. With demand still soft in many Western consumer markets, it is also proving difficult for companies to pass on higher costs to consumers. This changing environment is forcing companies to reassess sourcing strategies. While no single country can match the scale of China, countries such as Bangladesh have large low-wage workforces that are now starting to be employed, while Southeast Asian countries are making moves to remove tariffs and customs restrictions. Preferential trade terms have also boosted exports from Cambodia and Bangladesh to the European Union (and also to China due to recent agreements between Bangladesh and China), while Indonesia has tended to be a more popular sourcing destination for Japanese and North American buyers. Cost alone is not the only factor driving some companies to source elsewhere. An ageing population and labor shortages in some regions in China are important factors for securing other sourcing destinations. Consumer companies sourcing there, however, may need to consider new supply models or destinations in order to sustain productivity gains as costs such as labor continue to increase. The age and quality of a country's workforce is important to understand its future potential. Hence there will still be good reason to invest more in younger and cheaper countries such as Bangladesh , Vietnam , Cambodia and Pakistan . �Food and drink, consumer goods, sourcing companies and retailers continue to reassess the role that Asian countries are playing in their supply chains,� according to Willy Kruh, global chair of KPMG's Consumer Markets practice and a partner in the Canadian firm. �Closer attention to efficiencies in production and the supply chain, in addition to optimizing costs, may dictate that production be scattered across a number of countries. As a result, there will be implications for business structuring, working capital management, risk mitigation, tax and business process engineering.� China 's infrastructure, the completeness of its supply chain, its speed to market and a growing presence in global shipping all mean that China will continue to be a preferred hub for sourcing. But Southeast Asian countries will increasingly present even more attractive sourcing opportunities as new preferential trade agreements continue to be negotiated. China has indicated its shift towards infrastructure and higher technology industries; in sectors such as textiles and apparel, there is a clear opportunity for Southeast Asian producers who can benefit from more maturity in supporting services such as sampling, sourcing of inputs and logistics.

Currently China accounts for a fifth of global manufacturing. Its factories have made so much, so cheaply that they have curbed inflation in many of its trading partners. But the era of cheap China may be drawing to a close as per economist.com, mainly due to increasing land prices, environmental and safety regulations and taxes and labour. On an average, labour costs have surged by 15-25% pa for the past four years. China 's coastal provinces are losing their power to attract workers from the hinterland. This is apparent in diminishing figures of the migrant workers returning after they visit home during the Chinese New Year break.
A Shopper's nightmare - Manufacturing Outsourcing Cost Index % of US cost

AlixPartners, a consultancy, offers this intriguing extrapolation: if China 's currency and shipping costs were to rise by 5% annually and wages were to go up by 30% a year, by 2015 it would be just as cheap to make things in North America as to make them in China and ship them there. In reality, the convergence will probably be slower. But the trend is clear. Many manufacturers are looking to relocate out of China to low cost destinations in the region. However, lack of reliable suppliers of specialized services is slowing down the shift. Instead, manufacturing houses are looking to automate more processes in a bid to replace some (but not all) workers. Advantage offered by low labor cost destinations are typically more than offset by other problems, especially the lack of a reliable supply chain. Many high end manufacturers opine that except in commodity businesses, �competence will always trump cost.� The other disadvantage in these low cost destinations is lack of competence, efficiency and a dearth of skilled labour. Also, another large benefit that coastal China offers is its proximity the booming Chinese domestic market coupled with increase in labour productivity complemented by the fact that China 's huge labour pool is large and flexible enough to accommodate seasonal industries. Also, China 's supply chain is sophisticated and supple. Even if labour costs are less than half of those in China to make a given product, the unreliability or unavailability of many components may make it uneconomic to make things elsewhere. As per Time.com, not all of the companies relocating to low labour cost regions are Western multinationals; in fact, many are Chinese firms. As salaries and spending power in China rise, the Chinese are importing more goods from the rest of Asia . At the same time, those rising salaries are forcing China to outsource more of its low-end manufacturing. The shift is also governed by predictability of future costs. According to HSBC, intra-Asian trade is forecast to grow at an average annual pace of 12.2% until 2020, 40% higher than the rate by which Asia's trade with the U.S. is expected to grow in the same period. Nearly 50% of Asian exports (excluding Japan ) now go to other Asian countries, according to Credit Suisse. That is more than the current demand for Asian exports in the U.S. , the E.U. and Japan combined. Consultancy firm Boston Consulting Group reported that many American companies might shift manufacturing back to the US. The consultancy says that the manufacturing in sectors like appliances and electrical equipment, furniture, plastic and rubber products and fabricated metal products, could shift back to the US before the end of the decade, adding US$20-55 bln in output annually to the US economy.

Interestingly, FDI in China is ticking and contrary to expectations, growing, rather than falling, albeit in a different direction, as per China Daily. FDI in China has not slowed but rather taken a different path, one that could put the nation at the forefront of high-tech investments by foreign companies. With low-cost manufacturing losing its edge, FDI is now moving away from the prosperous coastal and eastern regions of China to the lesser-developed inland and western regions. Foreign direct investment rose by 0.05% year-on-year in May to US$9.2 bln- the first increase in over six months. This comes at a time when most of the other economic indicators and the global economy have remained sluggish. During the first 5 months of the year, the number of new foreign companies setting up units in China fell to 9,261, a 12.16% fall from the same period in 2011. The total direct foreign investment brought in by these companies during the period dipped by 1.1% to US$47.1 bln. Investment from the European Union during the first five months dropped 5.06% from a year earlier to US$2.8 bln, according to information provided by the Commerce Ministry. However, these lower numbers are likely to change when the global economy and Europe come out of their economic crises. Foreign companies have created more than 30 million jobs in China so far and account for more than 35% of the total industrial output value. So in real terms, a slowdown in foreign investment will have a spillover effect on overall economic growth. From 2008, when many orders were cancelled in the aftermath of the global financial crisis, exports languished and the government had no choice but to open up the vast and untapped domestic market for FDI.

 

 
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Good Day, Interested to start manufacture soft pvc labels at Bangalore, Karnataka, We would like a consultant or company that can guide us in setting up the unit sholinimpex@gmail.com 9886017618

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I want to start PVC compounding for electrical cable according to IS 5831 -1984 , Kindly share the right formula for PVC compound with ingredients.

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Amiya Kumar made a post.
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We make transparent soft pvc water hose green in colour 3/4" & 1" in diameter . kindly assist us to know how we make the pvc compound for such production. What grade pvc resin and all necessary components and additives we need and the ratio of each to make 100kgms compound . Thanks for your assistance.

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Shrinivas made a post.
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Hello sir We are manufacturer of soft pvc gaskets we have problem with roughness on profiles and we make compound at own.

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dear sir, I am interested to supply pvc jointing liquid formula .

Farhan Khan made a post.
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Hello sir, I am a pvc profiles manufacturer, I am falling back with one of my client. The profile he want is black in colour which I am providing him but the problem is that he is asking me for more finishing (SHINE) in that profile. I request you to please help me regarding this matter. Thank you.

Kapil Bhalla made a post.
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Greeting for day!!!!!!!!!!!!! we are starting manufacturing for making pvc skipping rope. will you please help us with correct combination of the pvc, cpw, dop/dbp.....with quantity or other relevant formula pleasse & thnx

Alain Ndagano made a post.
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I am a grey Pvc pipe and HDPE Pipe manufacturer...i would humble request your advice about the formula to mixing Resin SG5 K-Value 65-67 with other components to make grey PVC pipes. This is our mixing formula but we didn't manage to make pipe the screw is blocking one we put material : -50kg Resin -1200gm One pack -500gm Steric Acid -300gm P-E Wax -100gm Titanium -14kg calcium Carbonate (from Dura Group Turkey) Please assist me with your formulation. Our machine is one screw machine

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Hello sir , I am manufacturing fresh pvc compounds with cpw, caco3 , dop , resin and stabilisers . I want to produce best quality which will not been sticky and oily after we supplied ! So plz tell formulation of best quality pvc compound .

Odo Hyginus made a post.
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Good day sir. Am Hyginus by name, a Chemical Engineering graduate, I want to go into production of PVC pipe and I will be glad if you help me with procedures and ingredients of making PVC pipe

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I have PVC pipe industry, But i want the saving ideas for my industry. And i need the cost sheet of the PVC pipe. Please share me in my email id bikashicmai@gmail.com call me 8336907193

Mohit prabhakar made a post.
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I am new to the PVC dip chemical business Sir can you advise me a recipe for PVC dip for hand tools. I have tried getting raisin dop cpw and dye from local supplier but I am not reaching the final result. As I am doing hit and trial with recipe. Kindly share the right formula for PVC compound for dipping hand tool items with very high gloss. Your reply will be a great help to a beginner. Thanks mohitprabhakar@gmail.com

P K Bhatia made a post.
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Worked on several types of PVC compositionsfor more than 25 years I may be contacted for your requirements any.

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hi, i have a 10 yrs experinced of all type pvc, (fr, frlsh,hr) ,zhfr, and type of master batches like pvc, pe eva (all colour) and compounding deplopment plz cl me..i want to good job.. thank you keshab gautam whatsup ; 08660807931

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We are usesing 124 d o p. For compound and I want to no ather then this what can v do .. good product.

Vithal made a post.
10-May-19

We are usesing 124 d o p. For compound and I want to no ather then this what can v do .. good product.

Abdul Rahman Saif made a post.
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We make transparent soft pvc water hose green in colour 3/4" & 1" in diameter . kindly assist us to know how we make the pvc compound for such production. What grade pvc resin and all necessary components and additives we need and the ratio of each to make 100kgms compound . Thanks for your assistance.

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Hello Sir We are mfrs of soft pvc shoe bag 2D 3D label, please suggest me best qlty composition of material Thanks & Regards JH ADS

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We manufacture good quality Lime stone Powder. (Ash coloured). Please find me purchaser for this product

Manjunath made a post.
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We manufacture good quality Lime stone Powder. (Ash coloured). Please find me purchaser for this product

12-Jan-19

We are manfacturing pipes and fittings. Now going to produce valves. Can u suggest any compound formula because the surface of valve is not smooth near injection point.

Abdulqader made a post.
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Dear sir I gald to write to you.. - i want do line to product pvc pipes glue.. as attached photos.. - and i want know what is the Components of pvc pipes glue . - What is the method or proccess to product pvc glue ... - is need mix or ....etc How many type i must to mix it.. or need tank just put material inside it...etc.. Please explain to me .. Please send me all details and photo and video and price of each type of raw material .. My best regards Abdulqader Yemen 00967772822422 aghwidy2002@gmail.com

JITENDRA SINGH made a post.
05-Dec-18

hello sir, i m fresh in pvc conduit eletric pipes manufacturing sector. so please suggest me about scope , raw materials availabililty , recipe for making good quality conduit pvc pipes and any other valuable information please. i will be thankfull to u.

Ragul. R made a post.
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I am working in pvc shoe machine. I'm new on this job. We have so many complaints in production. Like air bubble,flow mark.. How to recure that problem..

AMJAD ALI made a post.
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Respected sir, how to 30 shore A pvc compound for shoe pls, help me.

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Raju Gupta made a post.
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Hello sir good day i am raju gupta currently in Nigeria I'm technician maintenance and production handling as like Pvc Pipe s Pvc celling sheet and Hdpe pipe s Lldpe s ppr pipe extrusion full maintananace S produce I have experience in plastic industries above 13years My whatsapp number : +25775586424 +2348094644220 Email ID : guptaji.vmore@gmail.com

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hi sir i want to know compound of soft garden pipe and its cost of manufacturing.

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Dear Sir, I want full Information regarding Raw Material of Pvc paver / Tile Mould Manufacturing. Plz sir Guide me for this. Thank You...

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Dear sir, Pls tell which chemical used to britning the pvc 2nd scrap pipes

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Dear sir, We are the PVC Pipe manufacturer when we go for higher Calcium carbonate for cost reduction due to density the weight of the pipe will get increased when maintaining standard wall thickness. please suggest a chemical to increase the wall thickness of a pipe with lesser weight

SUKHVINDER SINGH made a post.
04-Jun-18

SIR I WANT TRANSPARENT PVC compound

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02-Jun-18

Sir I want to start Pvc crystals granules manufacturing Kindly give me most economical composition for this

Abhishek kr made a post.
30-Apr-18

Dear sir/madam, how much use in chemical pvc board And chemical list.

avinashgupta made a post.
30-Apr-18

sir iwant manufactured pvc wall/sealing panel so please suggest any book or formula for that . pvc resin + caco3 and witch type other chamical will be used and there supplier

Noor made a post.
12-Apr-18

Dear Sir, I want full Information regarding compounding recipe / formulation of Raw Material for pvc flex banner manufacturing. which is low cost and good quality. Thanks, Regards, Noor

Vishal made a post.
24-Mar-18

Dear Sir, I want full Information regarding Raw Material of Rubber Pvc Mould Manufacturing. Plz sir Guide me for this. Thank You...

Faisal khan made a post.
12-Feb-18

Dear respected sir, I want making pvc eraser, but i no know formulation, how much ingredient and its %, temperature and what type of extruder machine. Plz sir guide me. Thanks and regard

YB made a post.
18-Jan-18

HOW CAN WE STOP BARKAGES WHILE MANUFACTURING IN RECYCLED RIGID PVC PIPE ASK SOME NAME OF GOOD SOFTNER / PLASTISIZERS

ASIF KHAN made a post.
05-Jan-18

HI THIS IS ASIF KHAN FROM KOLKATA AND I WANT TO KNOW THE RESIN FORMULA USED TO MAKE FOOTWEAR ITEM LIKE PVC SOLES.. CAN U PLZ HELP ME OUT WITH THIS ?? I WILL BE VERY MUCH THANKFUL TO U .. THANK YOU

zihad made a post.
03-Jan-18

Hallow sir, Thanks for such as good jernal . But i can't identify about Flow promoter . What kinds off chemical this is and Where it was found ?If i want to use this ratio than The U-pvc pipe quality and strength off pipe will be good or not .Thanks to you Zihad

Pradeep. Jethani made a post.
01-Jan-18

I want to make garden tubing&,transparent tubing ,(,soft) . Manufactured here using maximum CPW to resin. Say100percent , 50kg resin & 50 kg resin k value 67. Kindly give me Compounding for transparent soft PVC used in house ,& ,garden. Stabilizer, PVC resin ,CPW etc. Thx.

Mustapha made a post.
17-Dec-17

Bonjour Mr, Je cherche à modifier ma formule en introduisant le caco3 et si possible de réduire quelle quantité pour la fabrication de tapis en PVC: PVC POWDER 100 KG. DOP OIL 80 KG. CALCIUM ZINC 3 KG. SOY BEAN OIL 2 KG. ANTIOXIDANT 2 KG. COLOR PIGMENT 2 KG

sheraz made a post.
14-Dec-17

HELLO I am looking for a better chemical recipe for making pvc dots onto cotton gloves , poly amide gloves waiting for your reply best regards sheraz aslam

KRISHNA MOHAN MISHRA made a post.
27-Nov-17

we have electric grade PVC for Insulation purpose . we purchase from china.The insulation compound tensile is coming below as required value & it is very soft. we need little hard & pass the tensile strength. please provide us the idea that we can make as per our requirement ,what we can do with this PVC. Regards. K.M.Mishra.

Aditya Bansal made a post.
31-Oct-17

We are manufacturer s of Pvc pipes we are using filler content of upto 160 PHR can you suggest a formulation for upto 200-250 PHR filler content we have a conical twin screw Machine 55/120 and are manufacturing pipes from 2"-4" Dia

Saud idrisi made a post.
17-Oct-17

Hello sir, I wanted to know that how much percentage of caco3 can be used in producing raw granule for flexible applications...

levon banikian made a post.
12-Aug-17

Hello dear ...what is best recipe for producing good quality pvc cling filmwrapp ...as soon as possible

Ayaz made a post.
12-Jun-17

Dear sir We are using pvc paste grade of TPC COMPANY THAILAND BASE When we mix with DOP it's give opaque appearance we are looking PIC PASTE RESIN TRANSPARENT BASE OR ANY ADDITIVIES PLEASE SUGGEST AS ANY FOR SAID ISSUE THANKS & REGARDS

PROMETHEUS GEORGE made a post.
04-Jun-17

Dear Sir Would be grateful if you can suggest the best grade of PVC Resin to be used for making uPVC Deep Water Well Casing Pipes. An immediate reply would be highly appreciated. Regards Prometheus George

Vijay Kumar made a post.
22-May-17

Sir, We are looking for a text method to find out the percentage of cpw in PVC soft film. Kindly guide us For Prima Vinyl Vijay Kumar

Vijay Kumar made a post.
22-May-17

Sir, We are looking for a text method to find out the percentage of cpw in PVC soft film. Kindly guide us For Prima Vinyl Vijay Kumar

MOHAMMAD PARVEZ made a post.
30-Apr-17

Dear sir/Madam have a nice day i would like to inform you that i am an Quality Controller in u-PVC Factory. And here we are looking for good approved formulation of u-PVC. i have read your formulation and we are interested in your formulation. and we have also very good requirements of u-PVC. so we would like to contact you. WE ARE WAITING FOR YOUR VALUABLE REPLY ASAP. BEST REGARDS MOHAMMAD PARVEZ Q.C

Prateek Jain made a post.
10-Apr-17

I want to make transparent soft PVC granuels (paste of DBP, CPW and PVC resin) which stabilizer should be mixed in this paste for shining and anti yellow and a bit hardening?

Devang Thakkkar made a post.
09-Apr-17

I make transparent soft PVC keychains (paste of DOP and PVC resin) which stabilizer should be mixed in this paste for shining and anti yellow and a bit hardening?

Yashu made a post.
06-Apr-17

How to use upvc (pipe fitting) chemical .....

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EPS block moulding, thermocole plant

EPS block moulding, thermocole plant