“Made in China.” It’s a slogan emblematic of many things – of cheap labor, of the loss of U.S. manufacturing jobs to lower-wage nations, of China’s rapid ascent to the ranks of the largest economies on Earth. China’s been blamed for the loss of many American jobs over the recent past, and data abounds to back up that claim. Washington’s Economic Policy Institute projects that more than 2 million manufacturing jobs and 2.7 million total jobs fled the U.S. for China between 2001 and 2011, fueling a renaissance in cheap products in American stores but also sending America’s trade deficit skyrocketing.
China’s jobs boom may be short-lived. Minimum wages are rising, workers are demanding higher labor standards, and a rising middle class has turned from cheap manufacturing jobs to employment in the service sector. The IMF believes that China will experience a worker shortage of more than 100 million jobs by 2040, something unthinkable during the peak of the “Made in China” era.
Technology has replaced some of China’s cheap labor, but many more jobs and companies have outsourced from the nation, once the very king of outsourcing itself. Where are these jobs and businesses going? Let’s take a look at the three nations that stand to gain the most business from the dramatic shift in China’s job market.
Vietnam: Asia’s new low-cost king
Unheralded Vietnam won’t make anyone’s list of the world’s most powerful economies. The small Southeast Asian nation’s surrounded by China on one side and India on the other, two of the world’s biggest emerging markets that also compete against the likes of Japan, South Korea, and Indonesia for dominance in the Asian economic landscape. That’s a tough geographic nut to crack, but Vietnam’s capitalized on China’s rising middle class and labor demands by taking a page from its larger neighbor’s playbook.
Vietnam’s GDP has grown at a sharp clip, and while its slowdown this year leaves it behind China’s 7.75% projected economic growth, Vietnam still is on pace for around 5% GDP growth this year. Meanwhile, high inflation hasn’t translated over to the country’s wages, keeping the labor market cheap and offering a huge advantage on China’s exploding labor situation. Athletics product maker NIKE, Inc. (NYSE:NKE) is just one of many firms taking advantage of Vietnam’s cheaper labor at China’s expense: Vietnam surpassed China as NIKE, Inc. (NYSE:NKE)’s top footwear supplier in 2010, and the country supplied around 41% of NIKE, Inc. (NYSE:NKE)’s total footwear last year, nine percentage points more than China.