China has been referred to as the “factory of the world” as it has been one of the most popular overseas sourcing destinations for global organisations. It boasts of a strong business ecosystem, low labour costs, low taxes and duties, and the lack of regulatory compliance make it easier for companies to scale production to demand.

However, given the stress due to the pandemic and the new trade tariffs, organisations have started looking for alternatives to China procurement in the emerging markets. Here are some of the top alternative markets that hold the potential to be the next manufacturing hub for the world.

Top alternatives to sourcing from China

• Vietnam

Often dubbed as “new China”, Vietnam is one of the most popular alternative sourcing destinations for organisations all over the world. U.S. imports have consistently been on the rise owing to lower labour costs and the recently introduced foreign-friendly policies. It is also geographically well-positioned, receiving fewer natural disasters that can halt operations.

• India

Boasting a similarly large labour force, India is an emerging market where organisations can easily set up supply chains that integrate with the existing ones. The country is much more “international” in terms of doing business as there are very few language barriers to overcome. New and improved production facilities have helped it overcome the lack of quality infrastructure issues, allowing companies to adhere to the global quality standards.

• Malaysia

It is the third-largest South-Asian economy and ranks as one of the easiest countries to deal with for business purposes. The lack of VAT on exports and a highly skilled workforce make it one of the most sought-after alternatives to China procurement. Geography also plays a significant role in this process, as it houses the second and third busiest ports in SE Asia and the Strait of Malacca is one of the most vital shipping lanes in the world.

• Thailand

Thailand is one of the most popular stores for computer accessories, components, and food processing. In fact, it is the world’s second-largest HDD producer as machines and transportation rank as the country’s top exports. The infrastructure quality is also one of the top ones across the world in terms of the ease of arranging international shipments. The plans to upgrade the deep-sea ports and the top manufacturing provinces make it promising for international organisations.

• Indonesia

Indonesia’s export industry is primarily dependent on mineral products and raw commodities. It boasts of a large workforce mainly comprising of the youth, which is a promising sign for the importers. Moreover, the lower labour costs, socio-political stability, and a consistent rise in the GDP make it a favourable destination for importers all over the world.

For most corporations, overseas sourcing is one of the easiest ways to increase product quality and save on production costs. Several nascent countries in southeast Asia have emerged as viable product sourcing destinations that offer a decent competitive advantage over procuring from China. Since procurement cannot be done with a “one size fits all” approach, these alternative destinations provide a credible contingency plan in case of future shocks.

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