Logistics operators’ top global hub remains China despite IP concerns

China remains the favoured country for logistics operators’ global supply chain base, despite rising concerns around protection of intellectual property rights, according to a new index published by Cushman & Wakefield.

Technology sophistication is preserving China’s competitiveness as the pre-eminent global hub as a manufacturing base, while the United States is considered the most attractive for logistics companies seeking to minimise exposure to economic and political threats.

Cushman & Wakefield’s Manufacturing Risk Index (MRI) provides insight into underlying trends in the logistics sector. The index assesses 48 of the most suitable locations for global manufacturers to expand or relocate operations in EMEA, the Americas and Asia-Pacific. Each country is scored against 20 variables that make up three final weighted rankings which cover conditions, cost and risk, underpinned by World Bank, UNCTAD and Oxford Economics data.

China emerged as the leading country at a baseline scenario, which gives equal importance to a country’s operating conditions and cost competitiveness. The United States is in second followed by India, Canada and Czech Republic making the top five. The Czech Republic is the highest ranked European country with Poland, Lithuania and Hungary also featuring highly.

When the data is looked at from a cost scenario – which gives a higher score to countries where operating outlay, including labour costs, is lower – China remains on top with Asian countries dominating the top 10. Only Lithuania and Romania, in seventh and eighth respectively, feature prominently from elsewhere.

The third ranking – the ‘risk’ scenario – takes into account rising geopolitical risk by favouring countries with lower levels of economic and political threat. In this scenario, North America leads the way with the US and Canada first and second respectively and China slipping to fourth. European locations account for more than half the top 10, led by the Czech Republic, which places third in the index, with Germany, Denmark, Finland, Austria and the United Kingdom also featuring in the top 10.

Lisa Graham, Cushman & Wakefield’s EMEA Head of Logistics and Industrial Research & Insight, explains:

“These rankings provide a critical insight into the rapidly-evolving manufacturing landscape and the decision-making factors behind locations. Global manufacturing has entered a new era, marked by the growing influence of technology in addressing productivity, labour shortages and safety in production and logistics.

“We are seeing formerly low-cost locations such as China and India moving up through the value production chain through country-sponsored support of technological adoption. That is why Asian countries featured so prominently in our rankings. There are still concerns over intellectual property issues in the region which mean, that despite higher costs, countries in North America and Europe will continue to thrive as manufacturing bases.”

Source: Cushman & Wakefield

Rob Hall, Cushman & Wakefield’s Chair of EMEA Logistics & Industrial, added:

“We are seeing an element of protectionism and nationalism putting global and regional and supply chains at risk. In Europe, the outcome of the ongoing Brexit negotiations will redefine regional production lines as well as reshape domestic and international flow of goods.

“Countries which invest in platforms that facilitate flows in and out of production lines will succeed. China’s seamless supply chain connections have resulted in substantial investment in infrastructure and multi-modal transport, including the New Silk Road rail and maritime projects, in addition to incentives. These factors are off-setting concerns regarding intellectual property.”

james.wallace@realassetmedia.com