A study carried out by the manufacturer’s organisation EEF/BDO Stoy Howard has urged British manufacturers to consider the opportunities and challenges offered by globalisation as emerging economies follow China’s success.
The report, ‘Global Challenge – Opportunities and Threats for UK Manufacturers’, found that China and other emerging economies have invested in skills, science and infrastructure to increase their competivity, and recommended that UK manufacturers should take advantage of the increased demand for technological products and expertise.
The study concentrated particularly on the potential markets of Vietnam, Thailand, Indonesia and Malaysia, as well as Eastern Europe, where it identified significant growth prospects for UK manufacturers. It also suggested that companies could exploit these opportunities through trade and relocating business overseas (offshoring), while maintaining competitiveness by investing in skills and innovation.
‘In recent years, China has been the destination choice for many firms seeking to relocate manufacturing or other production functions,’ said Stephen Radley, chief economist at EEF. ‘There are clear advantages in this choice, but firms need to realise that this is very much a moving target and also not overlook other opportunities elsewhere.’
‘Firms must also realise that China is not content to remain the workshop of the world and is developing its own research, innovation and design capabilities.’
According to the report, UK firms have been slower to tap into the emerging markets because traditionally they relied on European and North American markets for export growth.
Although the study emphasised the growing number of options that firms have for investment and exporting, it also warned against the short-term approach of offshoring to try to lower wage costs, and suggested that companies should not ignore opportunities to restructure their business closer to home.