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Vietnam ‘a better bet than China’David Smith
THE most attractive location for manufacturing investment is Vietnam, not China, and the United Arab Emirates beats India as a location for service-sector activities, according to a new emerging-market index to be launched by Price Waterhouse Coopers this week.

The index assesses 20 prominent emerging-market locations on the basis of “reward” factors, including production costs, size of market, taxes, transport costs and tariffs, and “risk” factors, largely defined by bond-market risk premiums.

It finds that the so-called Bric economies � Brazil, Russia, India and China � do not come top as locations for either manufacturing or services.

In the case of manufacturing � where it is assumed that 50% of production will be sold in the domestic market and the rest exported � China comes second to Vietnam, and is followed by Poland, Chile, Malaysia, Thailand, India, South Africa, Hungary and Saudi Arabia. Vietnam, according to the index, is highly cost-competitive, though risks are also relatively high.

“India and China are undoubtedly important markets but Vietnam and Malaysia are now serious rivals,” said Ian Coleman, Price Waterhouse’s head of emerging markets.

For services, the assumption Price Waterhouse made was that only 10% of output is exported. This fits more closely the model for sectors such as financial services, rather than the outsourcing of back-office and call-centre work.

The UAE came top, followed by Saudi Arabia, South Korea, the Czech Republic, Hungary, Poland, Russia, Chile, Kazakhstan and Malaysia. India was in 18th place, due to the limited opportunities for selling services into India.

http://business.timesonline.co.uk/tol/business/economics/article2041477.ece