CNBC reported from transport economics firm MDS Transmodal that China’s status as the world’s factory has weakened while neighboring nations arise.
Data shows that China has lost its share of global exports of consumer goods. Compared to 2016, the country’s market share in clothing and accessories, footwear, furniture, travel goods, and handbags plummeted by 4%, 7%, 11%, and 13%, respectively.
Beijing’s adherence to “zero-COVID” has been among the main drivers behind the trend. The measure disrupted production, forcing companies to resort to other destinations to keep production going.
Antonella Teodoro, a senior consultant at MDS Transmodal, told the news agency, “China’s “zero-COVID” approach is impacting production and manufacturers are seeking for alternatives to the current ‘factory of the world.’”
Most of the favor has diverted to Vietnam. The country is similar to China and offers cheaper labor costs. The Southeast Asian nation was already on the rise some years before the pandemic. Since it began investing in the marine and manufacturing sectors in 2014, its far-distance trade has risen 360%.
Other alternatives include Malaysia, Bangladesh, India, and Taiwan. Between 2016 and 2022, Bangladesh’s share of global clothing exports increased by 2%.
Besides “zero-COVID,” China’s manufacturing position has also been eroded since the U.S. trade tariffs in 2018 and the supply chain woes. Akhil Nair, senior vice president of products, Asia Pacific for SEKO Logistics, said the tariffs had inspired fashion and footwear companies to change their sourcing away from China.
Two days before the 20th National Congress on October 16, China’s General Administration of Customs postponed the release of September trade data indefinitely. According to Bloomberg, economists forecasted that the country’s international shipments would increase barely 4% over the previous year, down from a 7.1% increase in August. It would mark the most tepid growth since April and the second trough since 2020.