SOUTH EAST ASIA: GATEWAY PORT DEVELOPMENT
READY, WILLING AND ABLE? With more manufacturing shifting from China to South East Asia, AJ Keyes assesses the impact on port requirements in Thailand, Vietnam and Cambodia
8 Figure 1: Overview of South East Asia Region
China has been the biggest exporter on a global basis since 2009, with hundreds of millions of its workers manufacturing and producing goods for shipment throughout the world. As the world’s most populous country, with 1.4 billion people, China possesses a massive low-cost labour force that has played a major part in the globalisation of supply chains satisfying demand for cheaper products wordwide. However, times are changing. The cost of doing business in China is rising, with higher labour costs making profits thinner, and recent trade and political issues with other key economies, notably the USA, resulting in the country’s stranglehold over the world’s manufacturing being disrupted. Consequently, demand for production in South East Asian countries like Thailand, Vietnam and Cambodia is rising. Yet, while China’s ports have developed over the past 20 years to keep pace with the country operating as the “world’s factory” a key question is will the shift of activity to these other developing countries be supported by sufficient terminal capacity and infrastructure?
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BIG NAMES MAKING THE SHIFT There are a number of manufacturing companies that have shifted or are preparing to move from China to South East Asian countries. One highly notable name is Apple Inc., the multinational technology company. In mid-2019, the UK’s Financial Times reported that Apple had already looked at the benefits of shifting up to 30 per cent of its production activities out of China and into countries in South East Asia, as part of a restructuring of supply chains. So, this was already in place ahead of recent COVID-19 disruptions. As one terminal operating executive, who did not wish to be named, says: “It may be called restructuring, but it means reducing costs. China has become more expensive, whereas other locations, such as Vietnam and others in South East Asia are now cheaper and as such a more attractive proposition.” Apple is not the only global brand adopting this strategy. Well-known sportswear companies, Adidas and Nike, have also moved significant manufacturing activities involving
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