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China Regains Top Position as World’s Most Attractive Location for Manufacturing

China has reclaimed top spot in real estate services firm Cushman & Wakefield’s global ranking of the most attractive markets for manufacturing, confirming its status as the sector’s powerhouse. Lithuania is ranked as the world’s second-most attractive destination for manufacturers, a result of having the lowest European labour costs in Europe, standing at 14% below Poland and approximately 30% below Slovakia. Last year’s number one ranked country, Malaysia, falls to third place.

Cushman & Wakefield’s Manufacturing Risk Index report ranks countries based on a range of risk and cost

factors, including political and economic risk, market conditions and labour costs, to provide a comprehensive assessment of the attractiveness of 42 countries worldwide.



In Central Europe, close proximity to Western European economies and improved infrastructure in the form of new motorways have significantly boosted the appeal of Hungary (ranked 7th), Czech Republic (8th, 2017 was 9th) and Slovakia (9th). Whilst labour costs have increased in recent years, they are still below those further west. Historical ties to Germany and Austria, the region (particularly Czech Republic, Slovakia, and Poland) has maintained its role as a lower cost location for car manufacturing, which continues to integrate a growing degree of automation

Hungary has distinguished itself in the region as a leader in pharmaceutical production. As Hungary emerges from a lingering fiscal crisis, it has made efforts to improve its competitiveness in the region, starting with lowering its corporate tax from 19% to just 9% which became effective in January 2017 - the lowest in the region.

These wage hikes, as well as growing labour shortages, have in turn increased the attractiveness of locations further east, including Lithuania (2nd), Turkey (10th), Romania (16th) and Bulgaria (19th). As well as the lowest labour costs, Lithuania was only beaten by Estonia for ease of doing business. In emerging manufacturing locations Turkey, Romania and Bulgaria comparatively weaker infrastructure, relatively high corruption perceptions and geopolitical uncertainty continue to act as a deterrent from manufacturers locating their plants. 

“Location and supply chains continue to be the key concerns for the manufacturing sector. Central and Eastern European countries remain highly attractive and globally competitive, as overall labour costs in the region are relatively low and infrastructure investment increases connectivity with the rest of Europe. The Central Europe is also becoming more competitive in the advanced production,” said Ferdinand Hlobil, Partner & Head of Industrial Agency CEE.

On a global basis, labour costs in core CEE economies (Slovakia, Czech Republic, Poland, and Hungary) are more than double those of China and India, but still 60% below the U.S.


China was ranked first in the baseline index due to its efficient supply chains and infrastructure networks that continue to provide a reliable export platform, despite cost-sensitive production increasingly moving to lower cost countries in the Asia Pacific region. Manufacturing is key to the ongoing growth of the region, with GDP per capita in Asia forecast to increase by nearly 25% in the next five years, with China (currently world’s second-highest GDP) and India (currently sixth-highest GDP) expected to see growth rates in the region of 30%. By 2020, manufacturing’s share of GDP will exceed 20% in the top 60 largest global economies. In China, manufacturing will still account for a massive 30% of GDP in 2025.

Malaysia fell to third position as it shifts from being a low-cost location to a high-value manufacturing hub, but the country remains extremely attractive and has largest pool of skilled workers in the region.

The UK, placed 31st in the 2018 rankings, has benefitted from the devaluation of sterling since the Brexit vote which has boosted demand for UK goods abroad. However, depending on the outcome of Brexit negotiations, the UK’s attractiveness as a location to serve the rest of Europe could be at risk as a hard border with the rest of Europe would increase the cost of goods and disrupt pan-European supply chains. In terms of Advanced Production rankings, when only high-tech manufacturing is considered, the UK is ranked 3rd behind the USA (1st) and Singapore (2nd), with Western Europe dominating the rest of the top 10.

Canada (5th) and the U.S. (6th) are among the top 10 in the rankings. A sound business environment, high-quality infrastructure, and availability of skilled labour contribute to their attractiveness as manufacturing locations.

The recent announcements from Toyota/Mazda and Samsung to make additional investments in new plants in the U.S. are fuelling hopes of reshoring. Following a similar announcement made by rival LG, Samsung recently made public its plan to invest $300 million in the construction of a new appliance manufacturing factory in South Carolina.

However, President Trump’s aversion to NAFTA treaty has cast a level uncertainty on the future shape of the North American supply chains. While currently unlikely, a withdrawal of the U.S. would penalise Mexico and Canada as manufacturing bases.

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