More and more Chinese companies are withdrawing from their home base. Due to geopolitical tensions and rising costs, companies are looking for alternatives. Asian countries in particular benefit, in addition to Mexico and some EU countries.
Western countries have been working for some time to become less dependent on Chinese manufacturers, and this trend is now also visible in China itself. “We see many China-based manufacturers looking to set up factories in other countries because of potential supply chain challenges and political risks,” Kearney consultant Shay Luo told Business Insider.
This shift could benefit India, as well as other countries such as Vietnam, Thailand, Malaysia and Indonesia. In addition, cheaper production locations near important markets are popular. For example, Mexico is used to serve the US market. The same is visible in Eastern Europe, intended for the Western European market.
India is mainly positioning itself as an alternative for international companies that want to leave China. In addition, India is also trying to attract Chinese companies that want to focus on the Indian market, such as smartphone manufacturers Oppo and Vivo and car manufacturer SAIC. Other car manufacturers are also moving to Thailand. Chinese producers of solar panels, on the other hand, are mainly moving to Vietnam.
Bangladesh is also receiving increasing attention. The clothing industry there is said to have attracted 770 million dollars (700 million euros) in direct investment from China. This makes China the largest foreign investor in the industry. A worker in Bangladesh earns an average of about $120 a month, which is less than a fifth of the salary of a factory worker in China, who earns $670 a month.
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The Chinese manufacturers of electric cars in particular are also charmed by Eastern Europe. Especially a country like Poland is seen as an important gateway to the rest of the EU. For example, BYD is already in talks with European countries about building a factory. Chinese companies that export from Mexico to the US mainly think they can save on transport costs and import tariffs.