Manufacturing in Asia

Posted on January 13, 2007 by John Hunter

The Economist explores the trend to manufacture in Vietnam, Indonesia, Malaysia… instead of China in: The problem with Made in China:

helping China’s share of the world’s exported goods to triple to 7.3% between 1993 and 2005. In comparison, every member of the G8 group of rich nations, with the exception of Russia, saw its share fall. It is a similar story with manufacturing output. Whereas China doubled its share of global production to almost 7% in the decade to 2003, most of the G8 saw their shares fall. Interestingly, only the United States and Canada saw their shares rise

It is nice to see this reported properly. The USA manufacturing share of global output has risen, not fallen, as we have stated numerous times: Manufacturing Value Added Economic Data – Manufacturing Jobs Data: USA and China – Global Manufacturing Data by Country. The most fundamental facts of global manufacturing – Global output is increasing. Jobs are decreasing (everywhere, not moving from one place to another – decreasing everywhere). China’s output is growing rapidly. The USA is still by far the largest manufacturer, USA output is growing faster than global output and much slower than China’s output. Japan is the second largest manufacturer with China third, by a fairly large margin though China is growing very rapidly.

Related: Manufacturing Jobs – China’s Manufacturing Economy – America’s Manufacturing Future

“China has become a victim of its own success,” sighs Peter Tan, president and managing director of Flextronics in Asia. He finds it especially hard to hire and retain technical staff, ranging from finance directors to managers versed in international production techniques such as “six sigma” and “lean manufacturing”. There are not enough qualified workers to go around, causing rampant poaching and extremely fast wage inflation. “China is definitely not the cheapest place to produce any more,” he says.
The car-parts industry is a good example, with both Toyota and Hyundai investing recently to take advantage of the almost 700,000 engineering and science graduates that India produces every year.

Also see: Toyota Chairman Comments on India and Thailand. There are many factors that will determine India’s manufacturing success: building adequate infrastructure, reducing bureaucracy, overall economic resources (to invest)… But the interest in Deming’s and Toyota’s ideas for management will be a large help if they continue to spread in India.

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