Singapore has become one of my highest website traffic originators over the past year. I know much manufacturing and production occurs there and in the region. Then I ran across this analysis from Samatha Mou, a research analyst for Interact Analysis. Mou is based in China providing support in the Industrial Automation sector. Check out the report here.

A series of global manufacturing hubs are being established in south-east Asia, including those for semiconductors in Malaysia, electronics in Vietnam, and automotive in Thailand. However, the concentration of sector-specific manufacturing in these territories is unlikely to trouble China’s vast economy.

As manufacturing becomes increasingly globalized, our research indicates that a number of countries in south-east Asia are becoming hubs for certain products and components. These include Malaysia – semiconductors; Vietnam – electronics; and Thailand – automotive.

The latest work by analysts at Interact Analysis shows the trend for international companies establishing facilities in the region is showing little sign of stopping, despite predictions of a growing trend for reshoring and nearshoring in many western markets and legislation such as the Inflation Reduction Act (IRA) in the United States encouraging domestic production of technology such as lithium-ion batteries. Malaysia, Vietnam and Thailand all offer relatively cheap destinations for the manufacture of parts for export to other markets.

In addition to global corporations choosing to base manufacturing operations in south-east Asia, some Chinese manufacturers are also expanding operations to other countries in the region. Creating manufacturing hubs, such as those in Malaysia, Vietnam and Thailand, can help eliminate inefficiencies, provide proximity to expertise, remove time zone problems, and provide greater control over production costs.

In conclusion, we are likely to see greater concentration of these industries in Malaysia, Vietnam and Thailand as each country appears to be specializing in production of parts. However, this is unlikely to have a significant impact on the vast manufacturing economies of China and India in the short term, and may well feed components and parts into their domestic manufacturing industries. We are also likely to see exports from the trio of south-east Asian territories to other regions, such as the expanding electric vehicle and batteries markets in the Americas and Europe.

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