Where in the World

Where in the World

BPA has worked closely with the  IPC since 1979, exploring the economic and technological factors that drive Electronics Fabrication and Assembly.  Now IPC have published a report prepared by BPA: ‘Where in the World’, exploring the Characteristics that influence the development of electronics fabrication , comparing 30 countries around the world

The  development of electronics around the world basically involves three factors:
•    making things cheaply in high volume to supply existing markets
•    fabricating intelligence/technology-rich products for mature markets where rapid response and flexibility are at a premium
•    the potential for substantial new markets as GDP per capita increases

From the late ’90s to the early years of this millennium China, the success story of the last two decades, was dominated by the first factor. China was an inexpensive area in which to grow production based on designs from OEMs situated in more mature economies, using techniques and materials sourced from these overseas supply bases.

This balance is now shifting as the Chinese economy develops and the second and third factors are coming into play. While it is true that North America, Europe and Japan remain the largest consumer markets world-wide,: the GDP per capita in these regions far outstrips most of the rest of the world.  However,- the populations of China and India and therefore the potential markets of these countries, exceed those of the traditional wealthy economies several times over.

Chart for country | population | GDP

Where to expect electronics assembly to develop – The RAMP (Regional/Area Manufacturing Profile)

As an economy matures, the increase in productive activity spurs both local consumption and expectations, leading to increases in local costs. This is clearly the case in China, where labor costs are rising sharply and, at the same time, the domestic market place is developing. OEMs and CEMs are now looking for low cost manufacturing sites outside China. These locations will preferably be close by – such as Vietnam and Indonesia, but the challenge is to define a way to compare locations using a common yardstick, considering that the viability of a potential site depends on a complex mix of factors.

BPA’s RAMP index brings together three fundamentals which round out the picture.  These are:

•    Wages – total cost to the employer including social costs. Low wages provide a strong incentive to the location of manufacturing

•    The Human Development Index (HDI) –the value of the workforce –  a measure calculated using various indicators for quality of life, such as health indicators and access to healthcare services, life expectancy at birth, nutrition levels, education and literacy levels, access to basic needs such as water and sanitation, etc. It also takes into account GDP per capita in terms of Purchasing Power Parity and percentage of the population living below the poverty line. Essentially HDI assesses not only the value of the resource purchased by the wages, but also the potential of the local market base.

•    Ease of Doing Business (EBD) – from the World Bank’s study, quantifying the ease of doing business using the simple average of the percentile rankings on each of 10 topics the EDB Index gives an idea of the facility with which the wages purchase the resource – which itself is measured by the HDI.

Chart comparing Brazil and Mexico

The 140 page report examines a series of criteria for each country , including comparative analysis to their representative region:

•    GDP per capita, 1990 – 2012
•    key economic measures
•    ease of doing business
•    enabling trade indices
•    international comparisons of industrial performance

In addition, regional comparisons are made regarding:

•    Overall GDP, GDP per capita
•    manufacturing sector employment
•    wage rates
•    foreign direct investment
•    comparative trade indices
•    worldwide distribution of major EMS manufacturing sites and a series of additional factors including
•    education,
•    health,
•    environment – notably water treatment,  important to Electronics Fabrication
•    Intellectual Property
•    Flows of investment
•    Indicators of economic maturity

The following are the countries that are examined in Where in the World:

BangaleshBrazilCambodiaChina
Czech RepublicGermanyHong KongSAR
HungaryIndiaIndonesiaJapan
KenyaMalaysiaMexicoMyanmar
NepalNorth AmericaPhilippinesPoland
RomaniaRussian FederationSingaporeSouth Korea
TaiwanThailandTunisiaTurkey
UgandaUkraineVietnam

Get in Touch

BPA Consulting Ltd
Dorset House, Regent Park
297 Kingston Road
Leatherhead, Surrey
KT22 7PL

Tel: +44 (0)1306 875500
bpa@bpaconsulting.com
www.bpaconsulting.com
Company No.: 3709460

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