The competitive edge for Asian economies — many of which depend on low-cost labor and exports for growth — will likely erode as technology changes the way manufacturers operate, Boston Consulting Group said in a new report.
Technologies such as robotics and digital simulation are allowing manufacturers to make customized products in locations closer to their customers in a more cost-effective way, the consulting firm said. That is a shift from the traditional practice of producing standardized products in a handful of giant factories in low-cost countries in order to achieve scale, it explained.
A number of manufacturers are already doing that. Adidas has moved some of its customized production to Germany; and Foxconn, which used to make all of its electronics products in southern China, now assembles in Mexico and plans to manufacture in the U.S. as well.
Asia has the most to lose in such a shift as many countries in the region, since the end of World War II, have relied on traditional models of manufacturing to propel "hundreds of millions of households into the ranks of the middle class and the affluent."