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The chief economist of the EEF employers’ lobby group, Stephen Radley, says: “China has been the destination of choice for many firm seeking to relocate manufacturing or other production facilities but they must realise China is not content to remain the workshop of the world and is developing its own research, innovation and design capabilities. Firms must not overlook other opportunities elsewhere.”
    
A study by EEF and accountants BDO Stoy Hayward has examined prospects in Thailand, Indonesia, Malaysia and Vietnam as well as Eastern Europe and says there are significant growth prospects for UK manufacturers through either trade or offshoring.
     
The report is echoed by research from consultants PricewaterhouseCoopers that suggests businesses look away from the BRIC countries – Brazil, Russia, India and China – for emerging market opportunities. It also identifies Vietnam as a manufacturing base along with Poland, Chile and Malaysia. For service industries PwC highlights Hungary, the Czech Republic, South Korea, Saudi Arabia and the United Arab Emirates.
     
BDO partner Kevin Cook says: “Manufacturers face a wide choice of challenges and opportunities as a result of the rapid pace of globalisation. However, what is clear from this report is that there is still considerable untapped potential in low-cost economies - potential that UK firms have the capability to unlock.”
       
The report notes that UK firms have historically relied on European and North American markets for export growth and have been slow to tap into emerging markets. Cook states that the rapid pace of globalisation means companies must look at the wider competitive threats though. He warns against a short-term approach of offshoring simply to exploit lower wage costs, however, not least because international pay differentials will close.