is declining. For example, Hong Kong and Singapore built their economies through manufacturing but have gradually shifted to services. South Korea is a special case, while it is considered highly developed, industry still generates a large share of GDP. In emerging India, a similar development to China is being seen. The service sector accounts for 53.89%, while industry is 25.92% and agriculture 20.19%. 28 ASEAN countries such as Vietnam, Indonesia, Thailand and Malaysia are also moving from an industrial to a service- focused economy - albeit at a much slower pace than China and India. Industry still accounts for the bulk of GDP there. For foreign manufacturing companies, the shift in focus in the APAC region represents an opportunity to fill the gap. You can use smart solutions, automated processes and robotics as a competitive advantage. Using them will not only enable your company to increase efficiency and productivity, but also to meet and optimise health and safety standards.
governmentâs step- by-step plan envisages a significant expansion by 2023. This should give 560 million people in China access to the 5G network. In addition, the government passed an economic stimulus package in the amount of 4.8 trillion USD in March 2020. 23 Beyond 5G expansion, these actions are intended to promote new data centers, artificial intelligence (AI) and smart manufacturing. But 5G also plays an important role in large parts of the rest of the APAC region. In South Korea, where the first 5G network was set up, 60% of mobile communications are expected to run on 5G by 2025. Today, 5G is already available in 85 cities there. In Thailand, there are already 24 cities (as many as in the advanced economy of France). At present, 5G expansion in the ASEAN region is primarily determined by questions of financing. With appropriate funding, a good 200 million people could have access to 5G there by 2025. 24 Singapore, an economically advanced nation, is currently leading 5G developments in ASEAN, having launched 5G in 2020. By 2025, the city-state is expected to have nationwide 5G network coverage. Vietnam, Thailand, Malaysia and the Philippines are pursuing similar goals. Businesses like yours could also benefit from this progress in infrastructure when expanding to China-APAC region. These developments only help to build the case for setting up smart factories there.
4. Increasingly mixed sector economies
The role of the manufacturing industry varies greatly across APAC countries and is highly dependent on their level of economic and socio-economic development. This can be illustrated very well by the example of China. The country has long been considered the workbench of the world . The export of consumer products of all kinds and the production of mass-produced materials brought the country rapid economic growth from the early 1990s onwards. 25 Between 2007 and 2017, production costs in the China rose by a full 60% due to this development. 26 This is one reason why the Chinese government has been promoting a new normal since 2014: a phase of transition in which economic growth is comparatively moderate at 6%-7%. Although China is still the world leader in manufacturing and exports, the contribution of industry to GDP has shrunk continuously over the past decade (the Made in China 2025 program is therefore no coincidence). At the same time, the share of the service sector has grown by more than 10% since 2010 and now accounts for the bulk of GDP. In Beijing, it even reached a share of 83.1% in 2019. 27
An additional opportunity for your manufacturing company is, for example, to offer a pay-per-use or production-as-a-service model. In this case, you sell production capacities to other companies. Data- based business models, i.e. trading with product and production data, are also an option in this context.
5. Foreign expertise is needed
The industries of many APAC countries are highly concentrated in specific manufacturing sectors: for example, electronics in Malaysia and Vietnam, automobiles and packaged food in Thailand, machinery and petrochemicals in Indonesia, semiconductors, packaged
APAC economies are in transition
This shift can also be observed in other APAC countries. Advanced economies are mainly focused on the service sector, while the importance of agriculture and industry
food and apparel in the Philippines, biopharmaceuticals and aerospace components in Singapore. Insufficient
25 - https://www.bpb.de/izpb/275570/von-der-werkbank-der-welt-zur-innovationswirtschaft
23 - https://news.sap.com/germany/2020/08/china-industrie-intelligent-resilienz/
26 - https://www.welt.de/finanzen/article187572810/China-Die-Werkbank-der-Welt-hat-ihren-Zenit- ueberschritten.html
24 - https://www.aseanbriefing.com/news/investing-in-aseans-digital-landscape-new-opportunities-after- covid-19/
27 - https://www.china-briefing.com/news/fuehrende-trends-im-chinesischen-dienstleistungssektor/
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28 - https://statisticstimes.com/economy/country/india-gdp-sectorwise.php
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