From the technological developments of Japan to the new industrial powerhouse of Vietnam, it seems global firms are no longer looking to China alone when it comes to manufacturing solutions. As trade wars and costs of production become increasingly pertinent, companies are on the hunt for alternative solutions in the Asian region. In this article, we take a deeper look into this shift – one that may mark a seminal moment for the future of global production.
1. Unlocking the Benefits of Asian Manufacturing
Asian manufacturing offers businesses a range of benefits, from reduced labor costs to improved access to resources and suppliers. But to make the most of these advantages, companies need to be proactive about their relationship with Asian partners.
- Search for partners. Research potential companies in the region, paying attention to their industry reputation, size, and how they align with your needs. Take advantage of networking and industry events to build relationships with key players.
- Develop a clear contract. Outline your expectations, including the exact roles and responsibilities of each party, payment, and the duration of the agreement. Make sure you understand the local laws and regulations that could affect the agreement.
Using Asian manufacturing can increase the efficiency and competitiveness of a business, but it also involves a certain level of risk. To unlock its true benefits, companies need to develop a clear understanding of their partners and the contract they create.
2. New Horizons: Global Firms Eye Alternatives to Chinese Production
The peaking of the US-China trade war and resulting predictions of a global economic downturn have pushed many businesses, across all industries, to explore new horizons for production. Far from the hustle and bustle of the mainland, there are many emerging offshore markets for global firms to consider.
- India: With a workforce of over 400 million people, India has long been seen as a potential offshoring powerhouse. With government initiatives focused on speeding up tech adoption and improving the economy, production costs in India remain attainable.
- Vietnam: A booming export economy and an export-oriented production strategy has made Vietnam an attractive offshoring option. The country offers an educated workforce and sophisticated infrastructure. Additionally, existing infrastructure investments originating from China and localization support from China and neighboring countries offer further benefits.
- Mexico: Boasting a strong economy, proximity to the US and government tax incentives, Mexico has become a frontrunner for global companies in search of an alternate location. The country also provides access to a variety of industrial sectors and a large pool of skilled labor.
The scope of offshore production opportunities continues to prop up with new countries such as the Philippines, Thailand, and Indonesia providing cost savings, specialized talent and easy access to the US market. Emerging markets have a lot to offer global businesses, including cost savings, access to new markets and a potential point of creative difference. Global firms now have many alternatives to Chinese production enabling them to operate smarter and more efficiently.
3. Breaking Down the Risks and Rewards of Offshoring to Asia
Taking the Leap
Offshoring to Asia can bring considerable rewards, with the potential to expand customer reach, enhance customer service, and reduce costs. However, businesses must recognize and understand the risks associated with it. An in-depth analysis of these risks and rewards will help businesses make an informed decision as to whether embarking on this journey is right for them.
Uncovering the Realities
Despite the potential benefits of offshoring, businesses must weigh up issues such as:
- Potential differences in culture, business practices and language.
- Risks related to data privacy, security and local compliance regulations.
- Long-distance communication issues.
- Unforeseen delays in shipments or deliverables.
At the same time, companies should take into consideration the multiple advantages, such as:
- Access to a highly skilled and international workforce.
- Ability to leverage countries with highly competitive labor costs.
- Proximity to other countries in the region, leading to potential business quickly.
Regardless of the organization’s goals, they should evaluate these risks and rewards carefully before taking the plunge into offshoring, in order to maximize the benefits and manage potential pitfalls.
4. Navigating the Changing Manufacturing Landscape in the Region
In a rapidly changing manufacturing landscape, staying ahead of the curve can seem daunting. The key is to identify the main trends in the industry and decipher how they will affect your own business. The following are just a few of the noteworthy trends turning heads in the region, from robotics to workplace automation.
Robotics and Automation
- Robots: Many warehouses and factory floors are starting to use robots, making labor-intensive manual tasks quicker and more efficient. Automated robots are increasingly being used to assist with the packing, sorting and loading of products.
- Workspace Automation: Automation of processes within a workspace takes it even further. From automated robots that use AI and machine learning to drive the most efficient workplace workflow, to automated equipment that aids in production, automation has made an appearance in the changing manufacturing landscape in the region.
Manufacturing Expertise Outsourcing
- Consulting: Companies in the industry are increasingly opting to outsource their manufacturing expertise to external consultants. This can range anywhere from strategy building to the organization of the actual manufacturing process.
- Fisher: Automation and outsourcing of manufacturing expertise doesn’t just take the form of consulting. More and more, companies are also turning to managed services providers like Fisher for the handle on specialized manufacturing capabilities.
Navigating the changing landscape in the manufacturing sector requires staying one step ahead of the latest industry trends. From automation and outsourcing to bespoke experts, the manufacturing scene abroad is bound to see shifts and additions in the near future. Understanding and evaluating the impact of these changes is key to ensuring a successful future in manufacturing. As the world’s factories continue to shift and morph, it is clear that Asia is now a key part of the global production process. With more and more companies looking to alternative manufacturing centers, it stands to reason that the march of industrial progress around the world will only continue. Asia is ready to take the region’s production capabilities to the next level, bringing the promise of a more equitable, vibrant and prosperous future for all.