China has retained a leading position as a top manufacturing destination globally, according to Cushman & Wakefield’s 2022 Global Manufacturing Risk Index report, which assesses the most advantageous locations for global manufacturing among 45 countries in Europe, the Americas and Asia Pacific. In the study, China ranks in the first quartile in the key assessment categories of baseline, cost and risk scenarios.
Cushman & Wakefield’s Head of Insight and Analytics Asia Pacific, Dr. Dominic Brown said: “Asia Pacific traditionally performs well under the cost scenario, this year has seen it make significant improvements under the risk scenario. Advanced markets have typically tended to dominate the risk scenario given their maturity and stability, but as global shocks continue the risk differential between markets has narrowed. Risks in Europe are significantly elevated on a year ago which has had the effect of making Asia Pacific more attractive as a manufacturing destination.”
Tony Su, Managing Director, Head of Industrial & Logistics Property Services, China, Cushman & Wakefield, said: “Leasing demand for logistics premises in China had largely recovered in Q3. Demand for high-quality warehouses from tenants in the manufacturing sector was robust, particularly apparent the new energy and automobile sectors. In addition, we observed that online retail sales in China were still growing, as a result, e-commerce and third-party logistics providers remained primary demand drivers for logistics facilities in the China market.”
Cushman & Wakefield’s annual Global Manufacturing Risk Index (MRI) scores each country against variables that make up the three final weighted rankings which cover conditions, cost, and risk. Based on the analysis, China maintained a leading position across the three key categories, strengthening its leading position as a top manufacturing destination globally.
Baseline Scenario
For the third consecutive year, China retains a top position in our baseline scenario ranking. China continues to enjoy significantly lower costs of labor than other major production locations. As part of the market’s transition to higher-order manufacturing, industrial production in China has remained buoyed by newly-emerging industries such as “new energy” and “new material” products, including charging piles, wind turbines and photovoltaic cells and the production of “new energy” vehicles which has benefited from positive government support. This transition, together with ongoing economic expansion of the Asia Pacific region and the commensurate demand for goods, will continue to support China’s manufacturing sector.
Cost Scenario
On a cost-weighted basis, the top manufacturing locations are overwhelmingly located in Asia. China, Indonesia and India all continue to benefit not only from a plentiful supply of low-cost labor but also lower costs in electricity and real estate construction.
Risk Scenario
When considering risk as a key location factor, China continues to perform well in the rankings, in part due to such high scores in the business conditions and cost factors but also due to improvements in corporate and economic risk conditions. In recent years, reforms designed to relax the regulatory conditions for foreign investment in China have been implemented, signaling the country’s determination create attractive conditions for more overseas investment.
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