“An accelerated reorganization of global supply chains that began after the U.S.-China hegemony war has led to the emergence of alternative countries as alternative production bases that can replace China,” said Lee Sang-won, head of product strategy at Korea Investment Management at an India & Vietnam investment seminar at the Conrad Hotel in Yeouido, Seoul on Nov. 20.
In fact, the Biden administration in the U.S. has been consolidating a U.S.-led global economic system by implementing the Inflation Reduction Act (IRA) and CHIPS & Science Act in August last year. In particular, it has been promoting reshoring to bring back U.S. companies that went abroad, revealing more of its protectionist color.
As the United States has perceived China as a real competitor, the United States has been redesigning its supply chain to exclude China from it. On the flip side, some countries are rising as the Next China.
“Vietnam is developing labor-intensive industries with abundant and cheap labor,” Lee said. “India is growing into the next China, Mexico is one of the largest beneficiaries of the IRA, and Indonesia is transforming from a resources-rich country to an electric vehicle hub.”
According to the World Bank, the four countries combined for US$128 billion in foreign direct investment (FDI) last year, more than 71 percent of China’s US$180 billion.
Altasia, a group of 14 Asian countries that can replace China and includes these countries, had a total labor force of 1.43 billion last year, surpassing China’s 950 million. As of September, Altasia’s and China’s exports to the United States in the past one-year period hit US$634 billion and US$61 billion, respectively, which is about US$20 billion more for Altasia.