And yet, even while regional markets such as Vietnam step up to the plate to make labour-intensive goods at low cost, other value-added factors would become more necessary, the report said.

 

As a wealthier China retreats from labour-intensive production, South-east Asian countries just like Vietnam, Cambodia and Indonesia have taken over those jobs.

 

Vietnam’s Hai Phong and Ho Chi Minh City, along side Bekasi in Indonesia, have drawn to swathes of greenfield investment, exclusively into electronics production.

 

With the funds sweeping into Vietnam - greatly from South Korea and Japan, as Asia turn out to be more internally connected - McKinsey noted that “a new set of cities begins to benefit from the influx of capital”, through the creation of factories, roads and jobs.

 

However, the report also revealed that industry value chains now depend more significantly on research and development, innovation, and value-added services.

 

“These shifts, combined with a wave of new manufacturing and logistics technologies, mean that countries across Asia will need to alter their investment priorities and develop new types of skills to compete in a more knowledge-intensive trade landscape,” the analysts published.

 

Source: TRONSERVE