This presentation will provide a high-level view when it comes to countries trying to compete in the world economy.
The presentation is not about pointing fault at the system, but looking at ways to compete against low cost producing countries.
2. PAUL YOUNG BIO
Contact: paul_young_cga@Hotmail.com
25+ years of experience
Academia
Corporate Reporting and Analysis
Internal Audit and Risk Management
Cost Control and Management
Re-engineering business process
IT Financial Performance and Risk Management Solutions
3. CHARACTERISTICS OF LOW COST PRODUCING COUNTRIES
Many low cost producing countries
Government restrictions on imports
Labor laws that do not protect workers
Lapse Environmental rules
Water Treatment
Emissions
Land management
4. TOP LOW COST PRODUCING COUNTRIES
Southeast Asia
Bangladesh
Cambodia
India
Indonesia
Malaysia
Pakistan
Phillipines
Sri Lanka
Thailand
Vietnam
Source: http://www.businessinsider.com/kpmg-countries-manufacturers-low-cost-china-2011-9#bangladesh-1
5. NORTH AMERICA / MEXICAN
Mexico has been able to pull itself out of an economic and social slump by bringing regulation change through continued
support from NAFTA. Mexico’s investment in their infrastructure garners great support for investment in manufacturing. For
example, the 2014-2018 Infrastructure Reform promises to use 598 billion dollars to implement 743 infrastructure projects.
262 of those projects will be focused on energy improvements, and 233 projects are catered towards communications and
transportation. Increased productivity, accessibility, and transport will build the maquila workforce and enable more skilled
laborers to accrue necessary knowledge about industrial culture. As the Mexican infrastructure strengthens, maquila workers
are able to contribute to their growing economy and make room for an up-and-coming middle class.
Mexico has an educated workforce with the ability to surpass traditional maquiladoras and work with advanced mechanical
operations. Young professionals benefit from manufacturing jobs and hold positions such as factory workers, programmers,
and operations management positions. Mexican workers are provided with opportunities to succeed in their careers, as
heightened manufacturing production maintains the country’s growing exports. With a new social status, Mexican quality of
life improves and more attention is given to work as the middle class contributes to the Mexican economy. But good news
for the new Mexican middle class is also good news for the U.S. labor force.
Source - http://offshoregroup.com/2016/09/01/mexican-manufacturing-catalyst-u-s-economic-growth/
6. COST COMPETITIVE INDEX
Source: - https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Manufacturing/gx-global-mfg-
competitiveness-index-2016.pdf
7. LOW COST PRODUCING COUNTRIES /CHINA
The exodus of factories moving out of China in search of lower-cost options in southeast and central
Asia is accelerating, as manufacturers face increased pressure to reduce unit costs.
Few industries have been spared amid the search for cheaper manufacturing alternatives, with rising
Chinese labour rates cited as a major concern affecting industries as diverse as apparel and high-
technology.
Source: http://www.scmp.com/business/companies/article/1863709/manufacturers-step-search-low-cost-
alternative-china
9. LABOR / MINIMUM WAGES
Many developed countries have established labor laws for minimum wages. Minimum wages for
developed countries tend to be higher than those of low cost producing countries.
Vietnam monthly minimum wages is about $145 month which is far less than say Canada at
$2,080/month
Source: http://www.ecotripsos.com/highestminimumwage/
10. SOCIAL SPENDING/GDP
Social spending
Healthcare
Education
Pensions
Infrastructure
Child tax benefits/Child Care
Defense
Environment
11. SOCIAL SPENDING / GDP
Source: https://www.oecd.org/els/soc/OECD2014-Social-Expenditure-Update-Nov2014-8pages.pdf
12. WHAT CAN BE DONE
Areas of focus
Trade/FIPA
Fair Trade Deals
Adopting BEPS
New transfer pricing Rules
Innovation
Investment in education
Expand opportunities
Advance manufacturing
Information technology
Expert Farming
Extraction/refining
Clean Technology