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SINGAPORE : China is making a push to develop its high-tech manufacturing sector as its new engine of growth.
This is to help boost its economy as the country is fast losing its cost advantage as the factory of the world due to rising wages.
Experts said this will open up new opportunities for high-tech firms in Southeast Asia.
The robust growth in China's economy has propelled wages higher in recent times.
This is especially so in coastal cities such as Shanghai and Beijing.
Observers said wages there has risen by some 10-12 per cent on-year in the past seven months alone.
Rising wage costs have weighed down China's competitiveness, and analysts said China will move up the value-chain into high-tech manufacturing sector.
That will include the production of semiconductor chips and integrated circuits.
David Cohen, director of Asian Economic Forecasting at Action Economics said: "The wages in China are rising although they are still quite competitive to the rest of the world. On another related dimension, they are starting to allow their currency to appreciate gradually They've been reluctant to let it go faster because they have been afraid that they would lost competitiveness.
"The tradition process during economic development is to the climb up the ladder to the higher value of activities as the traditional industries are facing intense price competition."
Still, industry experts said Southeast Asian companies can join hands with Chinese firms instead of competing against them.
Chinese high-tech manufacturing firms are expected to increase their domestic market share to between 70 and 75 percent over the next two to three years.
Satish Lele, VP of Industrial Technologies at Frost and Sullivan said: "All ASEAN countries can look at the 1.2 billion people as a market. However, it's not going to be easy for ASEAN countries mainly because they enjoy the cost advantage that local Chinese brands do.
"So, a good way would be to partner with these Chinese companies, in terms of building this advantage, and be able to sell to China."
Experts said that ASEAN firms which already have a head-start in high-tech manufacturing can now offer their expertise in product design, and branding & marketing.
Market watchers also noted that the pace of developing the high-tech electronic manufacturing sector in China will be moderated. This is to ensure sufficient jobs for the vast Chinese population.
Companies can also build up strengths in other areas like the biomedical and the nano-technology sector, which could put them in good stead when China opens up these industries. - CNA /ls
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