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 open factories in other countries due to 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.
Car manufacturers
India is positioning itself primarily as an alternative for international companies that want to leave China. Additionally, India is also trying to attract Chinese companies that want to focus on the Indian market, such as smartphone makers Oppo and Vivo and automobile maker SAIC. Other automakers are also moving to Thailand. Chinese solar panel makers, on the other hand, are mostly moving to Vietnam.
Bangladesh is also receiving increasing attention. The garment industry is said to have attracted $770 million (€700 million) in direct investment from China. This makes China the largest foreign investor in the sector. A worker in Bangladesh earns an average of about $120 a month, which is less than a fifth of the salary of a worker in China, who earns $670 a month.
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Mexico, Europe
Chinese electric car makers in particular are also fascinated 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 exporting from Mexico to the United States mostly think they can save on transportation costs and import tariffs.