Foreign Enterprises Accelerate Their Withdrawal From China

The deadline for ASEAN leaders to establish the ASEAN Economic Community (AEC) is set in December 31, 2015.

Experts and scholars from China and ASEAN have said that once AEC is completed, it will complement and merge with China ASEAN Free Trade Area and form a larger market.

Over the past few years, China's labor costs have risen, forcing

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Industry and other manufacturers pfer to Southeast Asia, and some ASEAN countries have begun to replace China to become a brand "processing plant".

Following the closure of Nike's only shoe factory in China in 2009, Adidas, another sporting goods giant, plans to move the only private factory in Suzhou to Burma.

Thailand's "national daily" recently reported that the Swedish auto giant Volvo will soon shift the factory from China to Thailand to save more costs.

Electrolux, an electrical equipment manufacturer based in Sweden, also established the first refrigerator factory based on ASEAN in Rayong, Thailand.

Gu Qingyang, an associate professor at Li Guangyao School of public policy, National University of Singapore, said: "there is a certain similarity in the industrial structure between China and ASEAN countries, especially in clothing.

In the field of automobile manufacturing and electronic components manufacturing, China and some ASEAN countries are at a similar stage of development, and their competitiveness is more than complementarity.

After the completion of AEC, foreign-funded enterprises may also accelerate the withdrawal from China.

But experts interviewed generally agree that this is not necessarily a bad thing.

Gu Qingyang said, "China can take advantage of this opportunity to shift the low-end manufacturing industry to Southeast Asia, accelerate the development of high and new technology, and continue to widen the gap between China's manufacturing industry and ASEAN manufacturing industry, so that it can rise to the level of high-end manufacturing between Japan and South Korea and ASEAN's low-end manufacturing industry, so as to lay a more solid foundation for high-end upgrading."

Some experts say that if we can take advantage of the differences within ASEAN, we will also benefit.

Jose Rizal Damuri, an economist at the Indonesian Center for international strategic studies, said that Chinese enterprises could set up different production bases or service centers in different countries according to the comparative advantages of their respective manufacturing industries.

Chen Yongzhi, executive director of the Chinese General Chamber of Commerce in Indonesia, for example, said that Chinese enterprises could set up food or agricultural production bases in Thailand, set up automobile manufacturing bases in Indonesia and so on, while products could be oriented to the whole ASEAN market.

Experts and scholars surveyed believe that Japanese and Korean enterprises are already in front of Chinese enterprises. Chinese enterprises, especially manufacturing enterprises, should seize the opportunity to speed up the layout of ASEAN so as to better achieve common development with the help of the large market formed by AEC.