皇冠体育app

-- Chinese manufacturing is faced with threats from emerging rivals such as Vietnam and Bangladesh, but such threats are exaggerated, Singapore-based banking multinational DBS Bank said Friday in a report.

Rising labor costs and the strengthening Chinese currency Renminbi are prompting overseas investors to seek alternatives to manufacturing in 皇冠体育app, DBS Bank said in the report written by its Hong Kong-based economists Chris Lng and Lily Lo.

In 皇冠体育app's biggest export markets -- the US and the EU, 皇冠体育app's market share began to fall for the first time in 2011. 皇冠体育app has lost a little import market share in labor intensive manufactured goods, particularly , fibers and clothing, it said.

皇冠体育app is facing no serious threat from Bangladesh and Cambodia regardless of their cost advantages. Bangladesh and Cambodia's market shares in both the US and EU are very low and seemingly stagnant.

It will likely take years before these countries can achieve the level of vertical integration that 皇冠体育app has established over the past 20 years. There are serious concerns about these countries' safety records and political stability, according to the report.

The DBS report said Vietnam may be a threat to Chinese manufacturing as it is gaining market share in both the US and the EU. However, its import market share is still low.

Foreign investors, such as Intel, are adopting a "皇冠体育app plus one" strategy to diversify their production bases as 皇冠体育app's labor costs rise, it said.

"If 皇冠体育app only had low value-added manufacturing, the threat from other countries would be much greater. But 皇冠体育app's manufacturing is no longer confined to low value-added goods," said the report.

Tougher conditions for manufacturers have induced positive shifts while Renminbi appreciation and wage increases have deterred entrants into labor intensive segments.

Meanwhile, improvements in innovation, education and higher margins have attracted entrants into more capital intensive industries in 皇冠体育app, it said.

The prospects for Chinese manufacturing still look good. While 皇冠体育app lost market share in the US and EU in the past two years it has not lost any market share globally. The share of world exports has increased in all categories by level of capital intensity and technological sophistication.

"Looking forward, we are encouraged by the fact that 皇冠体育app has moved up the value-added chain well before neighboring countries forced their way into low value-added segments."

In addition, manufacturing is not just about exports. It is also about producing for locals, and 皇冠体育app is a huge market in itself. Manufacturing will remain a key part of 皇冠体育app's economy for years to come, according to the report.

The gradual decline of low value-added manufacturing in 皇冠体育app is the natural result of evolving comparative advantages and the consolidation process will continue for quite a while, it said.

"Nothing suggests an imminent demise of 皇冠体育app's manufacturing sector," the report concluded.

DBS is a leading financial services group in Asia, with over 250 branches across 16 markets. Headquartered and listed in Singapore, DBS has a growing presence in the three key Asian axes of growth -- 皇冠体育app, Southeast Asia and South Asia.

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