Labor Cost: We are Expensive… But Together We Will Succeed

This fine I read an article on labor costs in Asia – and how South East Asia countries compete with regards to driving manufacturing to their own soil. The figure below shows the different cost of labor as per the sources mentioned in the footnote. It seems that – very obvious that Singapore is the most expensive, and Malaysia is just behind them. We are about 50% more expensive in China – and the rest of the countries are way way way WAY much cheaper than us.

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With, high cost in China – its will mean that goods will be more expensive. According to the article in Wall Street Journal, it will be difficult for companies to switch to the rest of the country like Vietnam and Indonesia because of lack of infrastructure to support large scale manufacturing. If one were to go to China – we can see 6-lanes… 8-lanes highway scattered everywhere. Humongous ports.. huge airports. It’s was planned and designed to cater for massive manufacturing capacity. On top of that, there’s also the huge domestic demand – which acts as a fallback plan in case there’s a drop in demand for export!

I think give it 5-10 years, with concerted effort by countries around South East Asia, there will definitely be a possibility to drive the manufacturers from China to South East Asia. Things like infrastructure, political stability (communist anybody?), market unity (1 ASEAN?) – will ensure more money to be invested in ASEAN. We shall see. Have a read on here http://online.wsj.com/article/SB10001424052748704488404575441802903187976.html?mod=WSJASIA_hps_MIDDLETopStoriesWhatsNews

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