The Stratfor Look at Post-China LCCS Manufacturing Regions in Africa
In our office, one of our most cherished subscriptions is Stratfor. I think that Lisa spends even more time reading the daily updates than our go-to, The Economist. Stratfor is a country and geopolitical intelligence service that is something every procurement team should have access to if they’re operating globally or sourcing (directly or indirectly) from global markets. Think of it as the CIA World Fact Book meets Bloomberg for country-level intelligence on a real-time basis.
Courtesy of a recent article in Supply Chain Digest, I came across a reference to Stratfor of particular importance for those in procurement: a view into post-China emerging priorities. SCD notes that “China is about at the end of its long low-cost manufacturing run, and is already starting to lose its place as the best locale for labor-intensive offshoring by Western and Japanese companies.”
But where will companies head for low cost manufacturing sourcing and production in the future? The answer might surprise you. Uganda, Ethiopia, Kenya, and Tanzania are on the list. Africa represents 25% of the overall list of emerging countries for manufacturing, as SCD observes (see map below).
But is Africa ready for the global sourcing prime time? Our trusty sourcing and supplier management analyst and correspondent Thomas Kase wrote an outstanding series on Africa’s procurement readiness and practices earlier this year on Spend Matters Plus/PRO. Subscribers can download his analysis Emerging Market Watch: Procurement in Africa.
SCD notes that “Strafor is already seeing a continual flow of companies leaving China, or choosing not to invest in China, and going to these 16 countries – and that this flow is now quickening, especially in the areas of apparel, footwear and mobile phone assembly. A move of these industries to new locations can be seen as an ‘early indicator’ of more significant moves across other sectors a few years later.”
Coming back to Statfor’s take on emerging manufacturing and low cost country sourcing (LCCS) as well as our own analysis, later on we’ll explore additional observations on China and other regions.
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