The Cost of Doing Business in ASEAN-Preview

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As China continues along its development path,
costs are rising in the country. This fact has both
negative and positive consequences for foreign
companies: while it will add to the production
costs of locally-based
manufacturers, it is also
indicative of an increasingly
affluent Chinese consumer
class. Our research indicates
that, if manufac turing
capacit y elsewhere in
Asia can reach 70 percent
of Chinese capabilities,
lower ASEAN operating
costs means it is a viable
proposition to relocate.
This is a generalization of
course, and variants will
affect individual business models, but this holds
true as a general rule of thumb.
It is worth pointing out that, when broaching this
subject with a Chinese production manager, there
will inevitably be resistance against uprooting or
even relocating part of any Chinese production
facility. This means that the economic cost data
analysis to determine just how competitive your
China operation is needs to be conducted by non-
Chinese managers.
In this issue of Asia Briefing
magazine, we provide a
comprehensive overview of
the cost of doing business
in China compared with the
Association of Southeast
Asian Nations (ASEAN). We
analyze some of the key
considerations that will
impact upon the profits
of an Asia-based business,
including labor costs, social
welfare, and industrial land
prices. In addition, we take a
look at how ASEAN’s export volume and GDP per
capita currently compares with China.
Recent EU and U.S. surveys have both concluded
that it is becoming harder to maintain profitability
levels in China. For certain businesses, now is the
right time to be evaluating options.
Introduction
This Month’s Cover Art
Baik Soon Shil 白纯实 (2004)
Mixed Media on Canvas, 45 x 45 cm
Art Projects Gallery
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