Recently, it has been customary to consider the βretreat routesβ from China for those manufacturers who have become hostages of the political situation. If in the case of Huawei, the American authorities can still ease the pressure on their allies, then the dependence on Chinese imports will worry the country's leadership even if it is upgraded. Under the onslaught of information attacks in recent months, the layman could get the impression that manufacturers are urgently moving enterprises from China, and such migration is not very profitable for them.
Publication on site pages , which debuted in ESM China, shows that the growth of the Chinese economy and the average income of manufacturing workers have long made neighboring regions of China more attractive locations for building new enterprises. In particular, only last year Vietnam managed to attract about $35 billion of foreign investment. In the local economy, approximately 30-40% of the turnover falls on the sector with state participation, and up to 60-70% is controlled by private business with the involvement of foreign capital. In 2010, Viet Nam entered into an agreement with ten other countries in the Pacific region, which allows 99% of trade between these countries to be exempt from duties. It is noteworthy that even Canada and Mexico became parties to the agreement. With the European Union, Vietnam also has a preferential regime for the application of customs duties.
Companies in the technology sector, when organizing production in Vietnam, are exempt from taxes for four years from the moment they receive their first profit, and in the next nine years they pay taxes at a halved rate. Production equipment and components that have no analogues of Vietnamese origin, these companies can import into the country without paying duties. Finally, the average wage in Vietnam is three times lower than in mainland China, and the cost of land is also lower. All this determines the economic advantages in the construction of new enterprises by foreign companies.
There are other countries with attractive business conditions in the vicinity of China. In Malaysia, for example, enterprises for testing and packaging semiconductor products have long been established. It is here that some of the central processors of Intel and AMD, for example, take on a finished look. True, local legislation in certain industries requires the mandatory organization of joint ventures, in which the share of foreign investors should not exceed 50%. True, the production of electronics refers to a preferential type of activity, and here foreign investors are allowed to retain all shares.
In India, the concentration of Chinese smartphones is growing. Protective import duties are forcing Chinese investors to set up production in India, but the local smartphone market is still actively growing, and this justifies itself. There are also specific inconveniences - the ready-made industrial infrastructure here is much worse than in China, so many investors prefer to buy land for building enterprises from scratch. Large companies, in general, prefer geographical diversification of production, as this allows them to protect their business from the concentration of economic and political threats in one region.
Source: 3dnews.ru