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Market Watch 2014: 4 Emerging Markets for Manufacturers

Posted by Allan Peiser, CPA on Mar 3, 2014 10:50:18 AM

As manufacturing in the United States becomes more and more expensive, many companies are looking for a way to reduce costs. For some, this means finding new places across the world to manufacture their products. Aside from China, Taiwan, and Indonesia, there are a number of countries which are opening their doors to manufacturing.

Consider these five emerging markets that may result in significant savings for your company over the long term.

1. India

Though it may already be an outsourcing powerhouse, India is set to increase its contribution to the global manufacturing economy significantly. Ernst & Young projects that over 70% of manufacturing growth will occur in the global market, with China and India accounting for over half of that growth. This growth is moving away from the majority of outsourcing in India - customer service and software development - and into manufacturing. India is poised to expand its manufacturing output, committing to a number of essential goals to fullfill the objective of a 12 to 14 percent growth in the manufacturing sector over 15 years. "Manufacturers will be tasked with creating 100 million jobs by 2025 with an emphasis on inclusive growth, which means creating appropriate skill-sets among rural migrants and the urban poor. The policy also aims to increase the depth in Indian manufacturing, enhance its global competitiveness, and sustain growth without further harm to the environment."

2. South Africa

South African car manufacturing may have dealt with some struggles, but other manufacturing sectors are moving full steam ahead. In July of 2013, the manufacturing sector grew by 5.4%. While these numbers may seem small, when compared with contractions in other emerging markets, this statistic exceeds expectations. 2013 has marked rapid increases for this growing sector, and it could be beneficial for manufacturing companies to consider expansion into what was once considered a risky market.

3. Vietnam

As Southeast Asia grows in both power and pocketbook size, Vietnam is becoming an important new hub for manufacturing companies seeking to expand their offerings to this market. Both inexpensive labor and governmental policies that are favorable to manufacturing are encouraging Vietnam’s growth. Tariffs on over 4,000 manufactured products have been reduced or eliminated, and the country is working toward eliminating other non-tariff barriers to entering this market. Manufacturing and data processing are the industries most likely to benefit from Vietnam’s growth, so it is certainly a place to watch for those at the helm of manufacturing companies of all sizes.

4. Indonesia

Indonesia seems to be recovering well from a several-year slump in manufacturing growth. A major player in manufacturing since the 1970s, the Asian Economic Crisis hit Indonesia hard. The growth here may be slow and a bit shaky, but over the long term it looks as if Indonesia will recover from the economic knocks it took after both the economic crisis and the 2004 tsunami. Policies at home may also be impacting Indonesia’s growth. When the Federal Reserve announced that it would be keeping monetary stimulus levels steady, the Indonesian Stock Exchange rose by over 5%. Economic development in Indonesia is trending toward a larger middle class, which could also mean new markets for manufactured goods.

The overall global economic picture may not be as good as it was 15 years ago, but some markets are showing that they could be excellent places for manufacturing companies to expand their production. As the economic recovery continues, it is likely that these markets will become extremely competitive for manufacturers.

For more information, contact Allan Peiser at (214) 635-2503, or one of our other experienced professionals. 

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.

Topics: Manufacturing