Especially in the ASEAN countries, it is also difficult for foreign manufacturing companies to keep up with the low local production costs. Against this backdrop, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam are considered among the world‘s most difficult markets to access in the manufacturing industry.
more than two-thirds are optimistic about their business future in the China. Although the Chinese government‘s current five-year plan still aims to strengthen the domestic market, this also means opportunities for foreign companies - especially as Beijing has set its sights more on reforming the healthcare and social systems and the financial market in the near future. And under the CAI agreement, there are legitimate hopes of increasing market openness for companies from Europe. Low production costs and extreme competition should also not deter you. On the one hand, costs in ASEAN countries are also rising steadily as the economy grows. Wages in the Vietnamese manufacturing industry, for example, have risen by an average of 5% annually over the past five years. 34 On the other hand, production quality and equipment cannot keep up with European standards. To stay with the Vietnam example: the manufacturing industry there is still much more based on manual labour and less mechanised. Moreover, the level of qualification required is comparatively low.
#6 Challenge: Regulatory environment
In the future, there will probably be some changes with regard to international norms and standards. In Europe, for example, bodies such as the Industry 4.0 sub-working group (UAG I4.0) of the German- Chinese Commission for Cooperation
Rules, regulations and standards often vary from country to country. While international standards exist, they do not cover all relevant aspects. For multinational manufacturers, modern technologies raise questions in this regard. After all, these are often so new that certain standards have simply not yet been created. In addition, in a market as complex as the China-APAC region, there are sometimes very different approaches in the individual countries. In China, for example, regulations on production and distribution can vary from province to province or even city to city. It is very important for manufacturing companies to be aware of regional regulations. Because even if the differences are minimal, can lead to changes in production at great expense to your business or your manufactured goods may not be distributed - in either case, a financial loss is likely.
in Standardisation (DCKN) or the cooperation of the German
Standardisation Council Industry 4.0 and Plattform Industrie 4.0 with the Japanese Robot Revolution & Industrial IoT Initiative are already developing international standards for the digital manufacturing industry.
How you can address this challenge:
Entering a new market always involves a certain risk, but working with regional experts help. The case of China is special in that the Chinese state plays a more important role in the economy compared to European countries. However, Beijing is well aware of the importance of foreign investors and companies in its own country. According to a study by the EU Chamber of Commerce, 59% of European companies surveyed found; Foreign and Chinese companies are treated equally. 33 Less than a tenth intend to make no investments in China. In the manufacturing industry, only 4% intend to withdraw part of their investment from China, and just 1% intend to withdraw all of their investment. In contrast, 59% plan to expand their business in China. More than half of European companies also said they expect to have achieved an EBIT above the global average in China in 2020. And
#7 Challenge: Local competition in Asia
While the European-Chinese partnership is a mutual give and take at the international level, many companies fear entering the Chinese market. The main reason is the fear of being disadvantaged. State-owned enterprises, for example, are supported by the Chinese government and account for almost a third of the country‘s economic output. 32 However, non-state-owned companies have subsidies that are available, creating some advantage over competitors from abroad. At the same time, foreign companies in China encounter a fairly closed domestic market and already existing digital ecosystems and business networks.
How you can address this challenge:
Here too, the support of experts for the region is worth its weight in gold. It makes no difference whether you are still planning your expansion to China-APAC or are already active there. Due to the constant changes in local legislation, it is advisable to call in professionals for technological as well as legal or economic policy issues, for example, in order to avoid severe fines and production stops. Compliance expenses for the observance of requirements are worthwhile: as a rule, they make up for the risk of possible large scale penalties.
32 - https://www.bpb.de/izpb/275570/von-der-werkbank-der-welt-zur-innovationswirtschaft
33 - https://www.rolandberger.com/publications/publication_pdf/RB_BCS_EN.pdf
34 - https://www.bcg.com/publications/2020/manufacturing-strategy-built-trade-instability
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