Although it is hard to imagine a world without China as a manufacturing superpower, in the 1980s, China was only an insignificant exporter in the world. In the past 30 years, China has continuously won market share, and since 200 1 joined the WTO, the growth rate of China has been accelerating.
China's market share growth rate is stabilizing.
It took China twenty-five years to occupy the top 10% of the total US imports, and only nine years later, the proportion rose to 20%. By 20 10, China will account for 19% and 29% of the total imports of the United States and the total imports of manufactured goods respectively. However, since 20 10, due to rising labor costs and intensified competition, the growth rate of China's market share began to level off (see the figure below).
Investors should not be surprised by this. Long-term changes in global manufacturing centers are actually quite common. For example, from the 1950s to the mid-1980s, Japan was a major exporter in the world-at the peak of 1986, it accounted for 20% of the total US imports. In 1970s and 1980s, South Korea, Chinese mainland and Taiwan Province Province competed to emulate the Japanese. However, after the sharp appreciation of the local currency exchange rate in the mid-1980s, which made the export products relatively expensive, Japan and Taiwan Province Province gave up their leading position.
Today, we believe that investors should pay close attention to the most vulnerable industries in China. According to the statistics recently released by the U.S. Census Bureau, a series of signs of weakness can be seen in clothing, toys, consumer electronics, computers and accessories, machinery and equipment and other industries. In 200 10, the share of American clothing imported from Chinese mainland jumped from 8% in 2006 54 38+00 to 40%. During the same period, the share of clothing imported by the United States from Mexico, Dominica, Honduras and El Salvador decreased from 25% to 65,438+02%. However, in the past two and a half years, China's market share in American clothing imports has dropped by more than 5 percentage points, and this share has been divided among Vietnamese, Bangladeshi, Indian and Indonesian countries.
Vietnam is the big winner.
In the past decade, Vietnam has been a big winner in a series of free trade agreements, including joining the WTO in 2007.
Nike's shoes in Vietnam have accounted for 40% of the company's total output-more than China. We believe that investors should pay attention to other multinational companies and their suppliers in the footwear and clothing industries, because they may gain significant cost-effectiveness by expanding outside China.
Even in China's seemingly flexible product industry, changes are imminent. Although China has a strong supplier system and other competitive advantages, its market share growth has been stagnant, while Vietnamese market share has doubled from a very low base. Following Intel 20 10, Samsung, Nokia and other electronic product manufacturers have invested in Vietnam.
Mexico pays attention to the automobile industry.
China's ambition to enter higher-end manufacturing industries such as automobiles, aviation parts and industrial equipment may run aground because of Mexican love. With Volkswagen, Nissan, Honda and other global automakers increasingly using Mexico as an export base under the temptation of competitive labor costs and preferential trade agreements, Mexico's automobile production is expected to rise from 2.9 million in 20 12 to 4 million in the next five years.
We believe that Mexico and Viet Nam are in a favorable situation and are expected to win market share in the world export field, while Indian, Bangladeshi and Indonesian may also play a certain role in the process of manufacturing leaving China. The withdrawal of manufacturing from China will not happen overnight. Some China companies will meet these challenges by moving up the value chain or going overseas by themselves. Investors need to know how these changes are unfolding, so as to identify those companies that are expected to benefit from China's increasingly shaky dominant position in manufacturing.
Sammy Suzuki, the author of this article, is the portfolio manager of AllianceBernstein's emerging market core equity fund and the director of the emerging market value stock research department. Translated by Chen Wei and Li Qiqi.