China has been the factory of the world for the last two to three decades. President Xi made China too risky. China is at risk of social unrest due to mass protests against Covid Zero and other policies. If you own a factory in China you will want it to be able to service the local China market. To service other markets, you would build factories in other locations.
Saving money is no longer an option when China is the only country that can host global factories. Apple exports nearly all of its iPhones and other products to China. China is too risky to be a China export hub.
Companies like Apple have other factories in Vietnam, and other countries outside of China to reduce business risk.
Governments are required to keep critical supply chains in place within their country. This is because of national security and military concerns. This is why the USA needed Taiwan Semiconductor in Arizona to build new semiconductor chip factories. In order to get Intel back in semiconductors, the US also invested heavily in Intel.
What will happen with the factories of the future? And where will they go?
In order to lower the impact on higher labor costs, more factories will be highly automated.
If there is a demand for the products, then factories should be located where they are needed. If the US has 50% of the purchasers, then the factories should be in the US or Cananda. Some of the factories for that demand could be in Mexico but Mexico’s drug cartel problem is not risk-free.
Exports from Vietnam, India and other areas of Southeast Asia could be possible. There could be limited production at these locations due to lower labor costs and exports.
Due to the Russia-Ukraine War, European locations also face problems. The war creates logistical problems in the region, as well as energy supply and cost problems.
After The Transition
The ASEAN countries’ GDP will increase as a result. The USA and many other countries will be able to export these factories. Vietnam, Indonesia and Mexico are more economically viable than the USA and China. Some people will travel to other countries, which could bring economic benefits to those countries. There will only be one country. To reduce risks, many countries will receive factories that expand or move away from China’s current operations.
Brian Wang, a Futurist Thought Leadership and a popular Science Blogger with 1,000,000 readers per month, is Brian Wang. Nextbigfuture.com is the #1 Science News Blog. It features many emerging technology trends, including Space, Robotics and Artificial Intelligence.
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