A number of countries are set to benefit from this recent shift, the report notes. 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 ASPAC. Clusters of specialized production are emerging, such as footwear in Indonesia and Vietnam and hand stitched fabrics and metalware in India.
According to KPMG estimates, over the past year, Indonesia and Bangladesh have been the biggest winners for footwear and textile exports respectively. Indonesia recorded 42 percent growth in main footwear exports to USD 2.1bn for 2010, while Bangladesh saw textiles exports grow by 43 percent to over USD 18 billion in the fiscal year to July 2011.
China’s scale and high levels of investment in fixed assets, infrastructure and skills continue to give it an advantage in the production of certain goods. In many product categories, higher productivity offsets higher labour costs. However, demand for closer-to-home production, small minimum order quantities and protectionist measures in some end markets could present some further challenges for sourcing businesses that are rely heavily on China.
While no single country can match the scale of China, countries such as Bangladesh have large low-wage workforces that are starting to be employed, while Southeast Asian countries are making moves to remove tariffs and customs restrictions.