Time to turn to Altasia
Published: 12 Jun. 2023, 20:09
The author is a senior reporter of the China Lab.
Decoupling from China seems to be becoming a trend. Major global companies are planning to relocate their factories from China to avoid a rapid wage surge in the country and the U.S.-China hegemony competition. As Korea’s exports to China decrease for 12 consecutive months, some say it could be a chance to lower dependency on China.
That’s not an easy choice. The “factory of the world” provides an optimal manufacturing environment in various fields, such as materials and parts procurement, logistics, and market accessibility. China produces abundant talents — about 10 million college graduates annually, for instance.
Lately, the new word — “Altasia” — has appeared. It was coined by British economic magazine The Economist, which combined “Asia” with “alternative,” referring to Asian countries that can replace China.
Although a certain country cannot replace China, it is a different story when multiple countries are combined. Japan, Korea and Taiwan have outstanding technologies. Singapore is strong in logistics while Indonesia and Malaysia are rich in resources. In Vietnam, Thailand and India, the frames for investment policies are in the works. Labor costs in the Philippines, Bangladesh, Myanmar, Laos and Cambodia are one-third of that of China.
The total working population of the 14 Altasia countries is 1.4 billion, surpassing China’s 950 million. The total amount of their exports to the U.S. is also larger than that of China. The Economist evaluates that they can offer enough manpower to replace China.
It is a trend already in progress. Taiwan’s Foxconn has diversified its Apple iPhone production bases to India, and Intel plans to build a factory in Ho Chi Minh City, Vietnam. Samsung has relocated its mobile phone factory from China to Vietnam. The change in the supply chains following the U.S.-China contest accelerates the shift of manufacturing to Altasia.
This is an opportunity for Korea. Among the 14 Altasia countries, Korea has competitiveness in almost all industrial categories, including semiconductors, automobiles, shipbuilding, and chemicals. If there are factories wishing to move to Vietnam, there are certainly companies that will come to Korea. Dutch semiconductor equipment company ASML is building its campus in Hwaseong, Gyeonggi.
Taking advantage of the industrial portfolio and technological competitiveness, Korea can be a post-China alternative in the high-tech manufacturing sector. That’s why regulatory reform is urgent here. Are the stakeholders in Korea ready to seize the opportunity? The rise of “Altasia” is asking Koreans.
with the Korea JoongAng Daily
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