As global economics combine with geo-political forces, Asia relocation trends reflect changing business priorities. Past trends led China to become a major destination for manufacturing, jobs, and relocation. However, recent trends show multinational companies are moving production outside of China. The US-China trade war is often cited anecdotally as a reason for this shift, and there is some evidence to support this claim.
The US-China trade war is only part of the reason for changes in Asia relocation trends. Economic factors in China such as rising costs as well as shifts in company market shares also impact talent mobility. Changing demographics also impact how companies might pursue global expansion. These forces lead companies to find new locations for manufacturing facilities in Asia.
Asia Relocation Beyond China
There are several countries, regions, and zones seen as viable alternatives to China for manufacturing and operating facilities. Several of these countries are members of the Association of Southeast Asian Nations (ASEAN), consisting of ten members:
- The Philippines
Spotlight on Malaysia: Asia Relocation Trends
Kuala Lumpur is the national capital and largest city in Malaysia. The city of Putrajaya is the seat of the federal government. Malaysia has an estimated population of over 30 million people. The country is multi-ethnic and multi-cultural. Approximately 50% of the population is ethnically Malay, and there are large segments of Chinese, Indian, and native populations.
Malaysia Economy and Growth Supports Asia Relocation Trends
Malaysia is a relatively open state-oriented and industrialized market economy. The country has a strong economic record, with Gross Domestic Product (GDP) rising on average 6.5% from 1957-2005 on an annual basis. Malaysia’s economy in 2014–2015 was one of the most competitive in Asia, ranking 6th in Asia and 20th in the world.
In 2014, Malaysia’s economy grew 6%, the second highest growth in ASEAN behind the Philippines’ growth of 6.1%. The economy of Malaysia in terms of gross domestic product (GDP) in April 2019 was estimated to be $999.397 billion, the third largest in ASEAN and the 25th largest in the world. Malaysia is projected to achieve high-income country status by 2024.
Overview: Kuala Lumpur Industrial Sector
Most of Kuala Lumpur’s industrial sector consists of facilities that are comparatively small in size. Larger facilities are located outside of the city, due to the high cost of land and buildings. Costs are often significant drivers of Asia relocation trends. Manufacturing constitutes about two thirds of the city’s industrial establishments, with service industries accounting for the other one thirds.
Kuala Lumpur Manufacturing Industries include:
- Metal and fabricated metal products
- Paper and paper products
- Plastics and plastic manufacturing
- Printing and publishing
Kuala Lumpur Service Industries include:
- Motor vehicle repairs
- Storage facilities
City Plans: Become an International Commercial and Financial Center
Kuala Lumpur has a vision to become a world-class city. To do this, the city is focusing on the knowledge economy, and this will affect Asia relocation trends. As a result, Kuala Lumpur is investing in new technologies, examining building and infrastructure requirements, and developing a highly skilled labor force. Training facilities are noted as available in the Technology Park Malaysia, and other educational venues such as the German-Malaysian Institute. Overall, Kuala Lumpur remains highly competitive in terms of costs as compared to nearby cities such as Singapore and Hong Kong. The city has been following the Kuala Lumpur Structure Plan 2020, and the economy has grown significantly, benefiting from Asia relocation trends.
What Does This Mean?
Kuala Lumpur is one of many dynamic and successful cities in Asia competing for investment, jobs, and technology. As these cities compete with each other, many are investing in the necessary infrastructure to attract knowledge economy firms. Also, skills training and education for the local workforce are increasing. Cities are also focusing on design and amenities to attract workers and firms that will help transform their economies.
What Should Employers Do About Asia Relocation Trends?
Employers pursuing global expansion plans should review Asia relocation trends. Several ASEAN countries may have positive economic aspects and desirable locations for a variety of operations, including manufacturing and services. Cities such as Kuala Lumpur are actively pursuing investments within the knowledge economy. Nations in Asia are increasingly becoming viable alternatives to China for corporate expansion.
GMS’ team of global relocation experts has helped thousands of our clients understand how to determine a number of optimal locations for global corporate expansion. Our team can help your company understand how to leverage Asia relocation trends to support corporate growth initiatives.
GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation® technology platform.
Contact our experts online to learn more about Asia relocation trends, or give us a call at 800.617.1904 or 480.922.0700 today.
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