BPA just delivered its latest report for the PCB industry. "The indications are that the electronics industry is set to enter another four-year period of growth." Whew! That's good news.
As the economy improves, companies are beginning to act on strategies and plans to position themselves in the geographic markets that make the most sense for the next decade. Thirty years ago, this was pretty simple for most companies. The U.S. and Europe were it. Like today, Japan's markets were pretty much closed, so focusing on that market wasn't on the list for many. The Four Tigers (Taiwan, Korea, Singapore and Hong Kong) were the exception but they were just emerging. Twenty years ago it was still the U.S. and Europe with the Tigers continuing to gain ground. Ten years ago, China jumped into the fray and garnered the lion's share of the attention of the suppliers and manufacturers for most of the last decade. It's been quite a ride for those courageous enough to tackle the Chinese Dragon. For some, it was a great move, for others a disaster. One thing is for sure: With China's entry into the global marketplace, the center gravity for manufacturing has shifted to Asia.
The Next China
So, today, as the global economy gets back on its feet, what's the next great "Factory to the World?" China still holds great attraction for many. Its command and control government and 1.3 billion people have been attractive to manufacturers--first, to manufacture products more cheaply for export to the U.S. and Europe and, then, to also be in a position to serve a domestic Chinese market with all its potential. But, as the low-cost manufacturing hub, China is starting to lose it allure.
The Chinese industry will likely not get too much bigger as manufacturers look for lower-cost solutions elsewhere. The rapid, crazy growth we saw from 2000 to 2008 is probably finished for a couple reasons. First and foremost: The Chinese cost of doing business has been steadily on the rise and will continue to rise as the standard of living improves for at least some of the Chinese population. Next, going forward, the rest of the world won't and can't tolerate China's unfair trade practices--currency manipulation, lack of protection for intellectual property and huge trade imbalances. The only way I can explain the last decade is as a reward from the developed world to China for moving away from a closed command-and-control economy and into the global free-market system. Of course, that gift spelled doom for many U.S. and European companies, but integrating China into the global economy was more important (I guess).
Then, where next? I ran into an article discussing emerging markets: The Next China: Five Emerging Markets To Watch. I won't go into it here, but it listed many countries that are up-and-coming players in this decade and the next. The article is more oriented toward investing, but it will give you a good sense of where the money is flowing now, and where it will flow in coming years. Really, the only country out there with the potential to become another China is India, but the "N11" as the author calls them, collectively, along with the other three "BRIC" countries (Brazil, India and Russia) will probably give China a run for its money over the next decade.