International News

Southeast Asia's Manufacturing Industry Recovers

Author : Bozhou Marine

Update time : 2022-01-17 09:03:15

Since joining the World Trade Organization, China's manufacturing industry has ranked first in the world for 11 consecutive years. Thanks to factors such as low labor costs, sufficient power and energy supply, and little pressure on environmental protection, China has become the "world's factory".

According to a previous report released by the Portuguese Footwear Association (Apiccaps), Asia is the concentration of global footwear production, accounting for 87.6% of the production in 2020, far ahead of other continents. In terms of countries, from 2017 to 2019, China continued to be the world's largest producer of footwear, but the proportion of output dropped from 57.5% to 55.5%.

The total output of Southeast Asian countries India, Vietnam and Indonesia, which ranked 2nd to 4th, accounted for 19.6%, 21.4% and 21.6% respectively, showing an upward trend.

The rise of the manufacturing industry in Southeast Asia has reduced the export volume of China's footwear industry by 66 billion US dollars. Calculated at the current exchange rate of the US dollar against the RMB, the loss is 430.42 billion yuan.

The decline is partly due to a drop in orders brought about by the U.S.-China trade war. At the same time, it is also partly due to the rising labor costs in China that some companies have begun to move to Southeast Asia.

  Vietnam

It is worth noting that, if there is no outbreak of the epidemic, Vietnam's footwear industry exports will rise steadily. Because Wind data shows that Vietnam’s annual export of footwear has reached US$18.318 billion in 2019 from less than US$5 billion before 2010.
Today, Vietnam's manufacturing industry is gradually recovering. Vietnam's GDP grew by 5.22% in the fourth quarter compared with the same period last year, higher than the revised -6.02% in the third quarter, according to data released by the Vietnam Statistics Authority.
In terms of import and export, Vietnam's exports in December increased by 24.8% year-on-year, and imports in December increased by 14.6% year-on-year; the annual export increased by 19% year-on-year, and the import increased by 26.5% year-on-year. In December, Vietnam's manufacturing industry grew by 10.9% from a year earlier.

  Indonesia

In addition to Vietnam, Indonesia has also received attention. Indonesia Business Daily reported that according to the records of the Indonesian Footwear Association (Aprisindo): the world's largest shoe factories are targeting Indonesia, and Indonesia has become a new destination for other factories.
If you want to absorb more investment funds to Indonesia, the supply of footwear raw materials is a serious challenge. Because Indonesia's industry relies on imported raw materials, one of which comes from Vietnam.
A large number of orders diverted from Vietnam has had an impact on the increase in production capacity of Indonesian industry. Even, for export purposes, the capacity utilization rate of the Indonesian shoe industry has reached 100%. In addition to the obstacles of raw materials, the industry is still facing the uncertainty of the new crown pneumonia epidemic in 2022.

  India

Indian manufacturing is also gradually coming out of the shadow of the epidemic. In December 2021, India's monthly apparel exports reached $37.29 billion, up 37% from the same period last year, with exports reaching a record $300 billion in the first three quarters of the fiscal.
According to recent data from the Indian Ministry of Industry and Commerce, from April to December 2021, garment exports totaled $11.13 billion. In a single month, the export value of clothing in December 2021 was US$1.46 billion, a year-on-year increase of 22% and a month-on-month increase of 36.45%;

India's exports of cotton yarn, fabrics and home textiles in December were $1.44 billion, up 46% year-on-year and 17.07% month-on-month.
India's merchandise exports totaled $37.3 billion in December, also the highest in a single month of the year. In December 2021, India's monthly apparel exports reached a record high of $37.29 billion, up 37% year-on-year.
According to the Apparel Export Promotion Council of India (AEPC), judging from the recovery of global demand and the stability of orders from various brands, Indian apparel exports will continue to rise in the next few months, or reach a record high.

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