Some shifts are taking place in manufacturers relocating operations and supply chains to less expensive countries even thought its costly and risky when moving production.
Electronics OEMs and contract EMS manufacturing PCB assembly providers are impacted by tariffs, the rising costs of materials, land and labor combined with more strict environmental regulations and compliance for hardware manufacturing.
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Vietnam manufacturing tech hub: Strengths and challenges |
Manufacturing v. minimum wage labor rates for select nations in Asia (USD/hour)
With the ongoing trade dispute at the time of publishing this article, other Asian economies could benefit at China’s expense. But China’s scale means it is unlikely to be displaced as an important player in the global supply chain. (Read: Mexico hourly manufacturing rate v China)
Data below is based on latest available from the various sources. Morgan Stanley research report containing the information above was published November 2018. Sources for the hourly wages across Asia for the report include ADB, World Bank, IMF, ILO, Euromonitor, CEIC, Haver, World Economic Forum, various statistical agencies, Morgan Stanley Research.
| Manufacturing wage | Minimum wage | |
| China | 3.8 | 1.7 |
| India | 0.7 | 0.3 |
| Indonesia | 0.9 | 0.9 |
| Malaysia | 4.5 | 1.1 |
| Philippines | 1.2 | 1.8 |
| Singapore | 21.9 | NA |
| Thailand | 2.1 | 1.2 |
| Korea | 18.7 | 6.6 |
| Taiwan | 8.6 | 4.1 |
| Cambodia | 0.7 | 0.1 |
| Laos | 1.1 | 0.6 |
| Myanmar | 0.6 | 0.3 |
| Vietnam | 1.3 | 0.6 |
ADDITIONAL INFORMATION
Top 10 impacts to EMS/ODM quote pricing OEM programs
Vietnam and South East Asia manufacturing resources page
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In the meantime, some EMS providers with big footprints in China have been scrambling to minimize the impact of costly tariffs and are seeking to create greenfield investments, form JVs or place small (or majority) investments in EMS provider locations in Asia, but outside China, to grow their global footprint in hopes to expand sales, marketing and manufacturing capabilities.
We caution OEMs when identifying EMS providers who seek EMS JVs with other providers or EMS-EMS partnerships, for a variety of reasons. Often times these business arrangements can have a strip mall mentality and difficulty can arise determining which partner is ultimately responsible when things don’t go as planned. (Read more on this here.)
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OEMs reading this can request a list of electronics contract EMS manufacturing providers in Asia (its free) that match your program requirements by clicking here, or you can also click on the map below.
Although rising, labor cost in China still can be considered reasonable by many, with average hourly wage among the lowest among the major developed economies. See chart below.
Hourly wages for developed economies (USD, 2016)
China’s labor force is aging but China’s labor quality has been improving, according to research by Morgan Stanley, with 34 million newly graduated tertiary students in the past five years, more than the entire supply of tertiary degree holders in Indonesia, Malaysia and Philippines combined.
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