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Manufacturing is an essential aspect of the global economy, and it becomes even more critical as demand increases, which leads to the establishment of more manufacturing plants, thus creating fierce competition in the sector.
Knowing where to manufacture products for maximum profit is essential for businesses that wish to get their production costs low, stay competitive and increase profits.
To this effect, we have compiled a list of the countries with the top ten manufacturing companies.
1. China
2. United State
3. Japan
4. Germany
5. India
6. South Korea
7. Russia
8. Italy
9. Mexico
10. France
1. China:
It is not a hidden fact that most businesses worldwide procure from or directly manufacture their product in China, and that is because of the massive manufacturing sector of the Chinese economy.
China leads the global manufacturing index, accounting for 31.63% of the world’s total manufacturing output. This is aided by an entrepreneurial economy, low labour costs, a large and skilled workforce, and a suitable infrastructure for manufacturing.
China is showing no signs of slowing down its manufacturing processes anytime soon. It has maintained this top position for over 14 years and has always had an upward trend.
The main exports from China comprise consumer goods like textiles, electronics, chemicals, machines, metals and more.
2. United States of America:
Until 2010, the United States of America was the leading manufacturing economy before China took over the spot.
Even though many businesses from the United States procure or manufacture their products from China, the United States of America is still in second place in the global manufacturing industry, with 15.87% of the worldwide manufacturing output index.
As the years pass, there has been a downward trend in the US manufacturing output and we don't see the country taking back the number one position as the biggest manufacturing country from China. Although hiring labour in the United States is more straightforward than that in China, it is much more expensive.
Popular products produced in the US include but are not limited to automobiles, chemical products, food products, military equipment, and aircraft.
3. Japan:
Japan, with a population of 123.7 million, ranks third in the global manufacturing output index, contributing 6.52% to the world's total manufacturing output.
Renowned for its rich culture, Japan is celebrated for its animation, arts and crafts, as well as its precision-driven high-tech manufacturing.
Japan's major exports include consumer electronics, automobiles, computers, and metals like iron, steel, copper, and semiconductors.
4. Germany:
Although Germany is number four on the global manufacturing output index, it stands as the number one European manufacturing nation. Her free market policy in the business and consumer market sector has gone a long way to make her one of the top ten manufacturing countries in recent years.
Germany, known for its engineering expertise, is a key player in motor vehicle exports, electrical machinery, and manufactured metals, contributing 4.78% to the global manufacturing output index. It is home to leading manufacturing companies, particularly in the automotive sector.
5. India:
India is a country known for its Medicare, Customer Service, and IT workforce, India controls about 2.87% of the worldwide manufacturing output. This is one of the countries that has achieved sustainable growth in their manufacturing outputs over the years and overtook South Korea to get to position 5 in this list.
Key products manufactured in India include medical equipment, pharmaceuticals, agricultural goods, textiles, engineering products, leather items, and chemicals.
6. South Korea:
With a population of 51.74 million, South Korea accounts for about 2.71% of global manufacturing output. As Asia's third-largest manufacturing economy, following China and Japan, South Korea focuses on a high-tech, service-driven economy.
It has become one of the fastest-growing developed nations in the world. Some of the popular products manufactured in South Korea include technological products, automobiles, petroleum, and machinery.
7. Russia:
Russia, rich in natural resources, has made significant investments in its manufacturing sector, securing its position as the 7th largest manufacturing country in the world.
Russia contributes about 1.83% of the global manufacturing output index having a major focus on industries like aerospace, defence and energy equipment.
Although it is projected that Russia might see a negative long-term impact on its manufacturing output due to the world with Ukraine, it still holds this position as of the time of writing this. (I will update this list when things change).
8. Italy:
With a population of over 59 million people, Italy sits at the eighth spot in the global manufacturing index with 1.8% of the worldwide manufacturing output.
Italy is regarded as one of the world's most industrialised economies due to its economic structure, modelled after the production and manufacturing sector encompassing various industries such as automobiles, energy, fashion, and machinery.
9. Mexico:
With a 1.69% contribution to the global manufacturing output, Mexico sits at number nine on the global manufacturing output index. Mexican exports are mostly mineral fuels, lubricants, food, transport equipment, and machinery.
10. France:
France, home to numerous iconic luxury brands across industries such as fashion, beauty, aviation, automobiles, electronics, and agriculture, ranks tenth in the global manufacturing output index, contributing 1.65% to the world’s manufacturing output.
France primarily exports vehicles, aircraft, food products (wine), pharmaceutical products, beauty and fashion products, and electronic and hydrocarbon components.
Key Factors to Consider When Choosing a Manufacturing Country
1. Labor Costs:
I understand that you're relocating your manufacturing operations primarily due to high labour costs in your home country. To ensure profitability, it's essential to compare labour costs across different countries.
For example, countries like China, Mexico and Italy have some of the cheapest labour costs in the world. Does that mean you should go ahead and set up your manufacturing process there? Consider the other factors below before making that decision.
2. Skilled Workforce:
The skill level of the workforce in the country you choose for manufacturing should be high enough to help you produce the best quality product possible.
You don't want to have issues with your customers’ satisfaction due to product default caused by unskilled labourers.
Countries like Germany, Japan and China are among the top 5 countries with the most skilled labour forces in the world.
3. Supply Chain and Logistics:
Proximity to raw materials, location of your warehouses, majority of your customers’ location and many more. All this must be considered for planning cost-effective shipping routes and logistics.
4. Quality Standards and Regulations:
Some countries place certain quality manufacturing standards and safety regulations on certain products and industries, like pharmaceuticals, electronics, and automotive.
You need to understand these regulations from various countries and see which one gives your business much more benefits and flexibility.
5. Government Incentives and Trade Policies:
To stimulate economic growth, improve infrastructure, and encourage technological transfer, some governments implement regulations, tax policies, and incentives to encourage foreign manufacturers to relocate their manufacturing operations to their country.
Some of these incentives include tax holidays, subsidies, or reduced import/export duties. Look out for countries with these in place and take advantage of them.
Source Manufacturers Globally With SARA
While the primary goal is to reduce production costs, selecting the right country for manufacturing is crucial, as any mistake in this decision can lead to significant financial consequences for your business.
Businesses who know where and how to source for their products remain afloat and competitive just like the 1200+ businesses that have partnered with us at SARA PROCUREMENT SERVICES LIMITED.
We can assist you with the process of sourcing manufacturers for your product globally and guide you in making business decisions based on our 20+ years of experience in the supply chain industry.
Contact us today and let's find the best country for your business together.
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