LONDON As other emerging economies seek to ride the wave of China's success, Britain’s manufacturers are urged to look at the wider opportunities and challenges globalization offers by a study from the EEF, the manufacturers’ organisation, and BDO Stoy Hayward.
‘Global Challenge – Opportunities and threats for U.K. manufacturers’ provides an in-depth analysis of where key low cost economies are heading and what this will mean for U.K. manufacturers. It highlights the fact that China and other emerging economies have clear ambitions to move up the value chain and are investing in skills, science and infrastructure to meet these goals.
U.K. manufacturing is seen as still having significant competitive advantages says the report and the opening up of these new and rapidly growing markets offers considerable opportunities to take advantage of demand for higher technology products and expertise.
The report examines the prospects in four other Asian markets: Vietnam, Thailand, Indonesia and Malaysia, as well as Eastern Europe, where the research highlights the significant growth in prospects for U.K. manufacturers. The report also examines how companies can exploit these opportunities though trade and offshoring, while maintaining competitiveness by investing in skills and innovation.
“In recent years, China has been the destination of choice for many firms seeking to relocate manufacturing or other production functions. 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,” said Stephen Radley, EEF chief economist.
According to the report, the fact that U.K. firms have historically relied on European and North American markets for export growth means that they may have been slower to tap into these new and emerging markets. However, the rapid pace of globalisation means that firms cannot ignore the range of competitive threats and opportunities that will continue to emerge.
The report also emphasises the growing number of options firms have for locating investment and exporting. This means that decisions on where to manufacture; which markets to target; how to sell to a more diverse customer base and where to carry out R&D and design are becoming increasingly complex.
It outlines some of the strategies that companies could adopt but warns against the short-term approach of simply offshoring in an attempt to lower wage costs. EEF and BDO believe that companies should not overlook the opportunities to restructure their business closer to home. In time, labour market constraints, skill shortages, ageing populations, productivity differentials and even political change will have implications for decision makers in the medium and long term.