Monday, September 23, 2013
"Post-China 16"- New emerging countries
This week’s topic is about supply chain networks. Currently, the majority of networks for manufactures reside in China. According to the article, “As Chinese Manufacturing Advantage Wanes, Which are the 16 Countries Poised to Fill the Void?,” the cost of producing a good in China will be just as much as producing the good in the lest expensive areas of the Unites States, by 2015.
George Friedman, founder of Strafor Global Intelligence, refers to the parabola of economic development that states that developing countries will have the opportunity to grow the economy to a certain extent and eventually decline. China is a prime example of the parabola of economic development. For 30 years, the country has led the world in providing low costs by offering low wages to their workers. Now as the economy of China has developed, workers are demanding higher wages, which is now causing companies to invest in other countries.
The article refers to these emerging countries as the “Post-China 16.” These countries are Mexico, Dominican Republic, Nicaragua, Peru, Ethiopia, Kenya, Uganda, Tanzania, Sri Lanka, Bangladesh, Myanmar, Laos, Cambodia, Philippines, Indonesia, and Vietnam. In terms of the apparel, footwear and mobile phone manufactures, new supply chain networks are popping up with steady usage. The article states that for large businesses with high volume, it is known to be less expensive to set up shop in a new location, as opposed to keeping production at a high operating cost.
Friedman also mentions that China could still prosper by switching economic strategies and will have to behave differently than they do now. But will the Chinese Government step in to ensure that the country maintains their economic leadership?
Also, many of my family members live in Vietnam. While emerging supply chains begin to thrive the economy in Vietnam, what does that mean for the future labor laws for my family? Once 30-40 years have gone by, who will step in to maintain the Vietnamese economy?