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2013 Global manufacturing competitiveness index: CEOs see China as the most competitive manufacturing hub

Talent continues to be key driver of manufacturing competitiveness


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Publish date: 22 January 2013

China remains in first place in manufacturing competitiveness, both today and five years from now, with business executives citing a number of key strengths: labour and materials cost advantage, strong government investment in manufacturing and established supplier network, according to the 2013 Global Manufacturing Competitiveness Index report from Deloitte Touche Tohmatsu Limited’s (DTTL) Global Manufacturing Industry group and the U.S. Council on Competitiveness.

“The leadership status of China in manufacturing competitiveness is expected to remain in the next couple of years. China’s competitiveness is bolstered by conducive policy environment either encouraging or directly funding investments in science and technology, employee education and infrastructure development,” said Ms. Rosa Yang, Co-leader, Manufacturing Industry Group, Deloitte China.

Based on an in-depth analysis of survey responses from more than 550 chief executive officers (CEOs) and senior leaders at manufacturing companies around the world, the report confirms that the landscape for competitive manufacturing is in the midst of a massive power shift, in which 20th-century manufacturing stalwarts like the United States, Germany and Japan will be challenged to maintain their competitive edge to emerging nations, including China.

Mr. Ricky Tung, Co-leader, Manufacturing Industry Group, Deloitte China, said the CEO ratings seem to suggest China is becoming more and more a developed nation competitor than its emerging economy counterparts. “In addition to supportive policies, China still has relatively lower labour costs and is above average in the attractiveness of its corporate tax rates. With its focused efforts to localize supply chains and create innovation hubs, China is also seen by CEOs as the only emerging nation offering the same supplier network advantages as developed nations.”

Also in the top three spots include Germany and the U.S., but, according to the survey, both fall five years from now, with Germany ranking fourth and the United States ranking fifth, only slightly ahead of the Republic of Korea. The two other developed nations currently in the top 10 are also expected to be less competitive in five years: Canada slides from seventh to eighth place and Japan drops out of the top 10 entirely, falling to 12th place. Overall, in five years, key emerging nations are expected to vault forward in the Index: Brazil jumps from its current eight place slot to third place and India jumps from fourth to second place. China remains firmly in first place.

Not surprisingly, frontier markets in Asia such as Vietnam and Indonesia are also on the rise. The global CEO survey results echo the view that while China and India are still prominent in discussions, manufacturers are turning their focus to these frontier markets for growth to capture both the growing local consumer demand and to serve as strategic manufacturing hubs in the global value chain.


2013 Global Manufacturing Competitiveness Index

Current competitiveness Competitiveness in five years
Rank Geographical Location  Index score
10=High 1=Low
Rank Geographical Location  Index score
10=High 1=Low
1 China 10 1 China 10
2 Germany 7.98 2 India 8.49
3 United States of America 7.84 3 Brazil 7.89
4 India 7.65 4 Germany 7.82
5 Republic of Korea 7.59 5 United States of America 7.69
6 Taiwan 7.57 6 Republic of Korea 7.63
7 Canada 7.24 7 Taiwan 7.18
8 Brazil 7.13 8 Canada 6.99
9 Singapore 6.64 9 Singapore 6.64
10 Japan 6.6/ 10 Vietnam 6.50
11 Thailand 6.21 11 Indonesia 6.49
12 Mexico 6.17 12 Japan 6.46
13 Malaysia 5.94 13 Mexico 6.38
14 Poland 5.87 14 Malaysia 6.31
15 United Kingdom 5.81 15 Thailand 6.24
16 Australia 5.75 16 Turkey 5.99
17 Indonesia 5.75 17 Australia 5.73
18 Vietnam 5.73 18 Poland 5.69
19 Czech Republic 5.71 19 United Kingdom 5.59
20 Turkey 5.61 20 Switzerland 5.42
21 Sweden 5.50 21 Sweden 5.39
22 Switzerland 5.28 22 Czech Republic 5.23
23 Netherlands 5.27 23 Russia 5.04
24 South Africa 4.92 24 Netherlands 4.83
25 France 4.64 25 South Africa 4.77
26 Argentina 4.52 26 Argentina 4.58
27 Belgium 4.50 27 France 4.02
28 Russia 4.35 28 Colombia 4.01
29 Romania 4.09 29 Romania 3.98
30 United Arab Emirates 3.93 30 Belgium 3.63
31 Colombia 3.85 31 Spain 3.63
32 Italy 3.75 32 United Arab Emirates 3.58
33 Spain 3.66 33 Saudi Arabia 3.46
34 Saudi Arabia 3.57 34 Italy 3.45
35 Portugal 3.39 35 Egypt 3.45
36 Egypt 3.24 36 Ireland 3.03
37 Ireland 3.23 37 Portugal 2.87
38 Greece 1.00 38 Greece 1.00

Source: Deloitte Touche Tohmatsu Limited and U.S. Council on Competitiveness.  2013 Global Manufacturing Competitiveness Index

Talent leads the way
The report found that access to talented workers is the top indicator of competitiveness – followed by trade, financial and tax system, and then the cost of labor and materials.

Drivers of global manufacturing competitiveness

Rank Drivers
1 Talent-driven innovation
2 Economic, trade, financial and tax system
3 Cost and availability of labor and materials
4 Supplier network
5 Legal and regulatory system
6 Physical infrastructure
7 Energy cost & policies
8 Local market attractiveness
9 Healthcare system
10 Government investments in manufacturing

Source: Deloitte Touche Tohmatsu Limited and U.S. Council on Competitiveness.  2013 Global Manufacturing Competitiveness Index

About the Study
The 2013 Global Manufacturing Competitiveness Index is an initiative led by The U.S. Council on Competitiveness and Deloitte Touche Tohmatsu Limited designed to determine how CEOs view the competitiveness of the manufacturing industry in different countries around the world. A global CEO survey, which generated responses from 552 CEOs and senior executives, offers perspectives on the most important factors that drive manufacturing industry competitiveness. The global survey results also helped to create a unique Global Manufacturing Competitiveness Index ranking the relative manufacturing industry competiveness of countries and reflect how executives perceive this may change over the next five years. The in-depth study seeks to define excellence in manufacturing and draw out the implications for manufacturers in terms of the competencies required to develop and sustain an edge in a new competitive landscape. Participants were also asked to provide their views of the global economic conditions and government actions that can bolster competitiveness in the manufacturing industry.

About the U.S. Council on Competitiveness
The Council on Competitiveness is a leadership organization comprised of CEOs, university presidents and labor leaders committed to ensuring that the United States remains the world leader. The Council has one goal: to strengthen America’s competitive advantage by acting as a catalyst for innovative public policy solutions. For more information, please visit www.compete.org.

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Wilfred Lee
Company:
Deloitte Touche Tohmatsu
Job Title:
Public Relations Senior Manager, Clients & Markets
Phone:
Email
wilflee@deloitte.com.hk
Name:
Bonita Chan
Company:
Deloitte Touche Tohmatsu
Job Title:
Manager, Clients & Markets
Phone:
Email
bonchan@deloitte.com.hk
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