Chinese manufacturers are facing more competition from their regional neighbours

  • HSBC has looked at recent trends in manufacturing sector wages, comparing the results between China and ASEAN nations.
  • The wage discount compared to China has grown in the ASEAN region since 2012, helping to improve cost competitiveness.
  • HSBC estimates foreign direct investment into ASEAN countries surpassed total investment into China for the for the first time since 1991 last year.

If you’re looking for wondering what nation may become the world’s next global manufacturing powerhouse, especially in basic goods, this chart from HSBC provides a few clues.

It shows the discount in manufacturing sector worker wages in selected ASEAN countries compared to Chinese workers, looking at the level in 2017 compared to the levels seen five year earlier.


The wage discount has increased in all six of these nations since 2012, making them more competitive from an employee costs perspective, especially in Indonesia, the Philippines and India.

“There are plenty of factors, of course, that determine an economy’s competitiveness — the real exchange rate, quality of infrastructure, the regulatory environment but wages, too, are part of the mix,” HSBC says.

“In the last few years alone, with Chinese workers’ income continuing to soar, the gap with Southeast Asia has continued to widen.”

While not the only factor in determining where manufacturing might move to next, HSBC says there’s already evidence that foreign firms are investing greater sums in the ASEAN region, estimating that foreign direct investment (FDI) likely overtook that plowed into China last year.

“It’s no wonder that foreign direct investment into the region has picked up noticeably,” the bank says.

“In fact, based on our estimates, last year was the first time since 1991 that FDI inflows into AEAN exceeded those into China.”


As has been the case throughout the past few centuries, the epicentre of global trade in manufactured goods is continually evolving and ASEAN could be next region to dominate.

“Until about the mid-1990s, ASEAN was the region’s export powerhouse. Then China came onto the scene and things got, well, a little tougher, as a lot of production moved to the Mainland,” HSBC says.

“ASEAN, it seems, has got its mojo back.”

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