Under the influence of the sluggish economic outlook of the United States and Europe and the possible decline in exports, the further upgrading of Asian manufacturing is facing a severe test. The recent successive global and national manufacturing purchasing managers' indices (PMI) show that global manufacturing output and orders tend to decline. JPMorgan's newly published global PMI index fell to 50.1 per cent in August from 50.7 per cent in July. By convention, an index above 50 per cent indicates an overall expansion in the manufacturing sector, and vice versa, a contraction. It is clear that the global manufacturing industry is in a critical stage of continuing to rise or fall.
Increased domestic demand is expected to offset the adverse impact of the external environment.
Asia is the base of global manufacturing. The manufacturing industry of most Asian countries is more developed than the service industry. ASEAN and China, Japan and South Korea (103) take manufacturing as the export pillar. Data from the Asian Development Bank show that in 2009, China accounted for 13% of global exports of manufactured products, the 10 ASEAN countries accounted for 6.1, Japan accounted for about 6%, South Korea accounted for 3.7, and the "10 3" accounted for about 29%. In the global machinery and transportation equipment exports, "10+3" accounted for 31%.
The analysis shows that the Asian manufacturing industry was greatly impacted by the international financial crisis in 2008. Since then, the major manufacturing countries in Asia have adjusted their export structure and made great efforts to open up new export markets. Domestic demand in Asian countries has also increased rapidly in recent years, which has increased the ability to "digest" manufacturing products in the region. The recently released purchasing managers' index of Asian countries shows that although the new export order data has fallen, the overall new order and employment data are growing at the same time, which indicates that more new orders come from local sources, and the increase in domestic demand is expected to offset the external environment. Adverse effects.
The development of the manufacturing industry has become an important reason for improving the living standards of the people in Asian countries, and the improvement of living standards will help the expansion of the manufacturing industry. In an interview with our reporter, the senior economist of the Philippine National Bureau of the Asian Development Bank said that the manufacturing industry is the pillar of a country's economic development, and the main way for most developing countries in Asia to improve their economies and reduce poverty is to rely on the continuous development of the manufacturing industry.
Large Multinational Companies Likely to Increase Investment in Asia
Zhuang Juzhong, deputy chief economist of the Asian Development Bank, told our reporter that compared with Latin American countries, Asian manufacturing has the advantages of cheap labor, high quality, abundant human capital, and stable overall political and investment environment. Coupled with the vast markets of China, India and other countries, these factors make Asia a major investment target for global manufacturing companies.
The "World Investment Report 2011" recently released by the United Nations Conference on Trade and Development stated that in 2010, foreign direct investment into South Asia, East Asia and Southeast Asia increased by 24%, reaching 300 billion billion U.S. dollars, accounting for nearly a quarter of the global total. Foreign direct investment into ASEAN more than doubled to $79 billion billion in 2010. The report predicts that Asian economies have made great progress in regional economic integration, and the development environment of the whole region will be more conducive to attracting foreign investment.
The analysis believes that Asia's advantages in the manufacturing sector are currently difficult to replace in other parts of the world. Although developed economies will focus on stimulating the recovery of manufacturing in the future to increase local employment, large multinational companies in these countries are unlikely to move factories that have been established in Asia and other parts of the world back to their home countries, especially labor-intensive industries. On the contrary, due to the uncertain economic prospects of the country, Asia's manufacturing and market advantages are more prominent, and large multinational companies are likely to increase their investment in Asia. Since last year, this trend has been very obvious.
On the whole, the problems in developed economies have not weakened the profitability of their companies. In the future, these companies will be more active in global investment and mergers and acquisitions. This is likely to attract more for Asian countries with manufacturing advantages. More opportunities for foreign investment.
U.S. companies continued to accumulate profits and cut spending in the second quarter of this year, with the total amount of cash and other liquid assets held by companies growing to $2.047 trillion, up 4.5 percent from the first quarter, according to a Federal Reserve Express on the 16th. Corporate cash holdings are at the highest level since the Fed began this survey in 1945. Bloomberg's previous forecasts showed that Japanese companies with a total of $2.4 trillion in cash will seek overseas acquisitions to increase yields.
The development of Asian manufacturing is also accelerating the interaction within the region, forming a situation of continuous strengthening of production chains through competition and complementarity. For example, in the same manufacturing industry, Vietnam, Indonesia and other countries have more cost advantages than China in producing clothing and shoes, but related machinery and equipment need to be imported from China. Of every $100 of China's processing and production exports to the European and American markets, about $35 to $40 goes to Southeast Asian countries. This situation has strongly promoted the upgrading of the manufacturing industry in the region.
At the same time, companies in the region are also increasing their investment in each other. Many Chinese clothing and shoe-making enterprises have moved their factories to Southeast Asia. Investment in manufacturing among the 10 ASEAN countries reached a record $21 billion billion last year.
Reviving manufacturing in developed economies poses a challenge to industrial upgrading in Asia
Manufacturing in Asia still faces some challenges. Zhuang Juzhong believes that, first of all, it is necessary to continue to expand domestic demand and reduce dependence on the markets of developed countries; secondly, developed countries are also actively revitalizing the manufacturing industry to create more jobs, which will compete with the upgrading of manufacturing industries in Asian countries; third, in some emerging Asian economies, processing trade still accounts for a high proportion and low added value, and industrial upgrading is the trend in the future.
The analysis believes that if developed countries revitalize the manufacturing industry, they will first increase investment and R & D in the middle and high-end, and secondly occupy the global market for mid-to-high-end products. This is not conducive to the further expansion and improvement of the Asian manufacturing industry.
Quan Dejian, an economic analyst at UOB in Singapore, told this reporter that boosting domestic consumption can make up for the lack of exports due to weak demand in Europe and the United States, but the income and consumption levels of Southeast Asian countries are low, and the consumer market has changed from a high-income market to a low-income market. In the market, corporate profits will decrease, and it will take some time for income to increase and market expansion. At the same time, Asian currencies may continue to appreciate. Therefore, companies must raise awareness and self-adjust, actively explore the Asian regional market, and gradually reduce their dependence on developed country markets. In addition, Africa and Latin America are non-traditional markets with high risks and high returns, great potential and broad prospects.
Experts interviewed by reporters all believe that as the economic downturn in developed countries in Europe and the United States will not exceed the international financial crisis in 2008, as long as the Asian manufacturing industry can seize this favorable period and further expand and upgrade the industrial level, it is possible to turn "crisis" into "opportunity".