South-east Asia's manufacturing malaise

THE shift of manufacturing from China to South-east Asia is a received truth for many observers, with the relocation of some production into the region cited as supporting evidence.

But this increasingly orthodox view is deeply flawed. Look beyond the headlines and it is clear that the main beneficiary of this relocation trend is Vietnam - and its success is not being replicated across the region.

Manufacturing across much of South-east Asia is actually in a profound malaise: it is often sub-scale, focused on lower-order activities, rarely internationally competitive and highly dependent on foreign direct investment. This state of affairs will create long-term economic challenges for the entire region, especially as China's manufacturing competitiveness reaches new highs.