Manufacturers favour China

Sixty eight per cent of manufacturers are likely or very likely to establish or significantly expand their operations in

in the next five years.

Despite pressures such as product safety concerns, rising labour costs, increased cost of raw materials and higher inflation affecting operations, according to a survey by Deloitte’s Manufacturing Industry Group, China remains the number one location in which manufacturers plan to expand their operations.

The figure rises to 84 per cent of manufacturers with revenues in excess of $1bn expecting significant expansion in China.

Of those planning to invest in China, 82 per cent expected to invest in production operations, 78 per cent plan to expand their sales and distributions operations whilst 44 per cent expect to invest in research and design.

China is not the only emerging market in which manufacturers will invest but it is certainly the most dominant. Forty seven per cent of manufacturers plan expansion of their operations in south-east Asia or Eastern Europe, 45 per cent in India and 44 per cent in Latin America.

Jane Lodge, UK Manufacturing Industry Leader at Deloitte, said: ‘The evidence is clear:

will remain at the forefront of operations for global manufacturers. However, the events of this summer and the increasing cost pressures will make them more aware of some of the potential risks of operating in emerging markets.’