China to stay as major manufacturing base in next 2-3 years

Manufacturers are leaving China amid intensifying trade disputes between Beijing and Washingtion, but the Asian giant will continue to dominate manufacturing operations in the next 2-3 years, especially for Taiwanese manufacturers, according to industry sources.

As China' manufacturing advantages decline, many supply chain players are seriously mulling moving their production out of the country, with Vietnam, India and Indonesia as popular destinations for relocation.

But there is still uncertainty concerning the development of two supply chains - the so-called "G2" structure - serving China and the US separately. There are also problems in diversifying production to targeted destinations, prompting makers to allow for flexibilities in their production deployments, the sources said.

Manpower and land supply in Vietnam has fallen short of demand, making it difficult to expand production facilities there. And India has been ravaged by Covid-19 with many new plant construction projects seeing slow progress at the moment. The sources said it is highly difficult for both countries to replace China as main production bases in the short term.

Despite the development towards "G2," supply chain players can hardly cut manufacturing ties with China at least in next 2-3 years, and China will remain home to manufacturing operations for most manufacturers in the foreseeable future, the sources said.