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. These optimistic estimates are mainly due to the strong Resumption 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 is what leads entrepreneurs to opt for these countries the proximity to the Chinese market e the possibility of taking advantage of the preferential tariffs created by the free trade area between China and the 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 of ASEAN countries. who else can benefit from reduced business investment in China. Each country has been analyzed through an “attractiveness” indicator”, based on several components such as the degree of similarity of the export basket compared to the Chinese one, 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 presents itself as the most attractive 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 that allows the proper functioning of the entire production process, and effective governance with a strong political stability e A regulatory environment open to foreign investment.

Furthermore, thanks to the high degree of similarity of the basket of goods exported by Vietnam compared to China, The country already has all the necessary elements to adopt a portion of typically Chinese production., especially in some areas such as textiles and electronic products. 

The result of this analysis it only confirms the phenomenon that has already emerged in recent years which sees 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’ASEAN and five of their free trade partners: Australia, China, Japan, New Zealand and South Korea.

Effective August 1, 2020, The EVFTA immediately eliminated tariffs on 85.61% of tariff lines for Vietnamese exports to the EU. Within 7 years, 99.2% of tariffs on 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 companies are already adapting quickly to the new measures and organizations authorized have already issued 15,000 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 largest free trade area in the world. One of the main advantages this agreement brings is the standardization of rules of origin which will allow companies, including those already present in the region, to ship goods without having to adapt to different criteria for each country. 

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