Business Prospects in Asia Pacific Manufacturing Industry

Business Prospects in Asia Pacific Manufacturing Industry

Executive Summary

In Asia Pacific region manufacturing is a major contributor to the economy and it is experiencing significant transition. Leading global manufacturers are shifting their operations to Southeast Asia in order to save money due to the changing demographics and increasing labour cost in Europe and North America. The manufacturing sector in many Asia-Pacific (APAC) economies showed a strong significant rebound since September 2020, the recovery in APAC manufacturing has been led by China, which returned to favorable industrial production growth in the second quarter of 2020, with manufacturing output growth strengthening in the second half of 2020.

Asia Pacific Economic Performance: APAC is one of the fastest emerging regions in the world. In 2020, the Asian economy shrank by 1.5%, on the other hand, the global economy shrank by 3.2%. According to the IMF, the APAC is expected to grow by 7.5% in 2021 and 6.4% in 2022, compared to 6.0% and 4.9% for the rest of the world.
China's economy outperformed its pre-COVID-19 level, while Vietnam's economy did so in the third quarter of 2020, and South Korea and Australia also recovered from the pre-pandemic level in the first quarter of 2021. While, other Asian economies, including India, Indonesia, Japan, Malaysia, the Philippines, Singapore, and Thailand, were still below pre-pandemic levels.

Impact of COVID-19 over APAC Manufacturing Industry: The outbreak of the virus severely impacted the Asia pacific manufacturing industries in 2020, as the manufacturing activity in Japan, South Korea, and Taiwan fell sharply in August 2021 as a result of global supply disruptions such as chip shortages and pandemic-induced factory shutdowns. Other factors that contributed to the increase in cost-push inflation included state-imposed lockdowns and curbs, supply-side shortages, and a surge in cost-push inflation. The onset and subsequent waves of the pandemic had a significant impact on Asia's largest manufacturing hubs and major global consumer-goods producers, namely Vietnam, Malaysia, and Thailand. Due to containment measures such as strict lockdowns in large cities and industrial hubs, production of consumer goods such as apparel, furniture, mobile phones, and other electronics was halted in Vietnam.
Driving Factors

Increasing FDI penetration in APAC region: According to the UNCTAD World Investment Report 2021, foreign direct investment (FDI) inflows to Asian developing countries increased by 4% to USD 535 billion in 2020, demonstrating resilience in the face of global FDI contraction. Despite the virus outbreak, FDI inflows and outflows stayed strong in 2020. The region received more than half of global FDI in 2019, making it the world's largest recipient of FDI. Growth was driven by China, Hong Kong (China), India, and the United Arab Emirates. Moreover, the FDI penetration into East Asia increased by 21% to USD 292 billion, boosted by a 62% recovery in FDI to USD 119 billion in Hong Kong (China), following a sharp drop in FDI in 2019 and as a result of corporate reorganisations by multinational enterprises (MNEs) headquartered in the economy.
Strengthening ASEAN Network for Trade Flows: Intra-region trade in Asia was sustained at 60% even amid the pandemic leading to nearly 5% contraction in global trade in 2020. ASEAN has overtaken EU to become the largest trading partner of China. Trade between ASEAN and China has more than doubled since 2010, from USD 235.5 billion to USD 507.9 billion in 2019 (18% of ASEAN’s total). China’s imports share from ASEAN economies rose from 11% in 2015 to 15% in 2021. Exports increased from 12% to 15% in the same period.

Challenging factors
Infrastructure gaps: Economic infrastructure gaps, both physical and digital, are affecting business costs and market competitiveness. According to an Asian Development Bank report, infrastructure investment in the region's developing economies will require USD 1.7 trillion per year from 2016 to 2030. The power and transportation sectors will require more than 80% of these investments.
APAC Manufacturing Sector Performance

Scope of the Study
The following synopsis is based on the report " Business Prospects in APAC Manufacturing Industry" published by Makreo Research and Consulting. The report delves deeply into various parameters such as market size, segmentation, value chain analysis, and industry cause and effect analysis. The study includes market dynamics that provide an understanding of industry opportunities, driving forces, major challenges impeding growth, and an analysis of future opportunities that may help market players capitalise on untapped business potential in the specific geography.

The report helps reader to gain information on following areas:
What is the value and volume outlook for the Business Prospects in APAC Manufacturing Industry in the past, present, and future?
Identification of factors important in changing the market scenario, increase in opportunities,
Identification of key emerging economies in Asia pacific region that can influence this market on a global and regional scale are all provided.
To understand the region's competitive outlook. Show more