August 3, 2018 —The current Sino-U.S. trade war, which has seen tariffs imposed on most seafood products from China (but not on re-exported processed product), is causing many seafood processing companies in China to reassess whether or not to move their operations out of China. This is the first of a two-part series looking into the issue.
Many seafood processing companies are now assessing whether to move to another Asian location where wages and costs are lower. Even before the trade war heated up between the United States and China, it was a well-known fact that the cost of doing business in China has been rising steadily for years. Today, the average Chinese worker’s wages are twice those in Vietnam.
There are plenty of takers for anyone moving processing activity out of China, starting with what Asia-focused advisors have begun to refer to as the new “Big 5” of Asian manufacturing competiveness. As listed in the Deloitte 2016 Global Manufacturing Competitiveness Index, the Big 5 are: Indonesia, Malaysia, Thailand, India, and Vietnam.
All of those countries have committed to reforms that have improved their rankings, such as creating a national credit scoring system that allows for quick due-diligence checks on would-be local partners, and regulatory reforms that make it easier to wind up companies in those countries. Also, there’s been movement on better utilities connections in several ASEAN countries, including Indonesia. Vietnam has created a one-stop shop for business licenses and tax remittances while Malaysia has put much of the process online. And India and Thailand have worked hard to streamline their export and import licensing systems.