From China to ASEAN: the new manufacturing reorganization in the post-Covid-19 era.

In this scenario Of crisis due to the pandemic, Asia's emerging markets are those for which a faster restart, with forecasts in 2021 of the +8.0% growth. Such optimistic estimates are mainly due to the strong revival of economic activity in China, particularly at the resumption of the supply of intermediate goods in the productions of other economies in the region.

In addition to the economic consequences, the Covid-19 has in fact highlighted the problem of production of many intermediate goods concentrated excessively in a few geographical areas, first among them China. 

The Asian region, characterized by the presence of numerous emerging economies, represents an almost natural choice For enterprises seeking investment alternatives to China. And one of the reasons that leads entrepreneurs to opt for these countries is precisely the proximity to the Chinese market e The opportunity to take advantage of the tariff benefits created by the free trade area between China and ASEAN countries. Despite, therefore, China's still significant position, other major markets in the region are attracting more foreign investment thanks to favorable demographic and economic characteristics. 

SACE's Study Office conducted an assessment on ASEAN countries. most likely to benefit from reduced business investment in China. Each country was analyzed through an indicator of “attractiveness”, based on several components such as The degree of similarity of the exported basket of goods to that of China, the size of the economy, the average level of wages, The quality of the workforce, infrastructure, and governance, the level of openness to international trade. 

Vietnam emerges as the most desirable destination for those companies seeking destinations other than China, with a significant gap from the rest of the group. The country has the best quality workforce in the face of 60% lower wages than those in China, a developed infrastructure network enabling the proper functioning of the entire production process, and effective governance with a strong political stability e A regulatory environment open to foreign investment.

Also, due to the high degree of similarity of the basket of goods exported from Vietnam compared to China, the country already has all the makings of its own part of the typically Chinese production, especially in some areas such as textiles and electronic products. 

The result of this analysis only confirms the phenomenon that has already emerged in recent years which is seeing an increasing number of companies transfer part of their production capacity to Vietnam. Not to be overlooked then The recent entry into force of two free trade agreements: the one Between Vietnam and the European Union (EVFTA), and the Regional Global Economic Partnership. initialed between the ten states of the’ASEAN and five of their free trade partners: Australia, China, Japan, New Zealand and South Korea.

Effective August 1, 2020, EVFTA immediately zeroed 85.6% of the tariff lines of Vietnamese exports to the EU. Within 7 years, 99.2 % of tariffs for Vietnamese products will be reduced to zero and the remaining percentage will be tax-free within the next 11 years. 

According to recent statistics, Vietnamese enterprises are already quickly adapting to the new measures and organizations authorized have Already issued 15,000 sets of certificates of origin, necessary to take advantage of the benefits of the agreement.

LUnder the signature of the Global Regional Economic Partnership. (RCEP) instead gave birth to the World's largest free trade zone. One of the main advantages that this agreement brings is The standardization of rules of origin that will allow businesses, including those already in the region, to ship goods without having to adjust to different criteria for each country. 

The agreements therefore have already shown the first benefits on the region's economy, and will have Important implications for all European enterprises as well.