The Rise of Southeast Asian Manufacturing: Pneumatic Component Giants Compete for the "New World Factory

In recent years, the rapid development of Southeast Asian manufacturing has attracted global attention. With the accelerated adjustment of the international supply chain, countries such as Vietnam, Thailand, and Malaysia are gradually becoming the "new world factory" of the global manufacturing industry with their labor cost advantages, policy dividends and geographical locations. Under this trend, the pneumatic component industry, as the "heart component" of industrial automation, has set off a wave of investment in the Southeast Asian market.

Dual drive of cost and market

Pneumatic components (such as cylinders, solenoid valves, air source processors, etc.) are core components of automation equipment and are widely used in electronics, automobiles, food packaging and other industries. In the past, China has always been the main production and consumption market for pneumatic components in the world, but with the transformation and upgrading of China's manufacturing industry and the surge in demand for local manufacturing in Southeast Asia, international leading companies such as Japan's SMC, Taiwan's AirTac, and Germany's Festo have set up factories in Southeast Asia in the past two years.

"The electronic assembly and new energy vehicle industry chains in Southeast Asia are expanding rapidly. Wherever the customers are, we must follow them." said the head of the Vietnam branch of a Japanese-funded pneumatic component company. Data shows that the market size of pneumatic components in Southeast Asia will increase by 18% year-on-year in 2023, with Vietnam and Thailand leading the growth in demand. The low local labor costs (about 60% of China) and preferential tariff policies have further promoted companies to transfer production capacity to the region.

Local competition and challenges coexist

The layout of multinational companies is not smooth sailing. Southeast Asian manufacturing is scattered in many countries, and the supporting industrial chain is not yet perfect, which puts higher demands on the local service capabilities of pneumatic component companies. Germany's Festo established a technical center in Thailand to provide customized solutions; Taiwan's AirTac added a warehouse in Vietnam to shorten the delivery cycle to 3 days; Chinese companies such as Ningbo Yitainuo have established a service system with local dealers through a joint venture model.

At the same time, local companies in Southeast Asia are also rising. Indonesia's Pneumatic Indo and Malaysia's AirTac have begun to get involved in the low- and medium-end pneumatic component market, grabbing market share with price advantages. "In the next three years, the Southeast Asian market will enter a reshuffle period, and technology upgrades and service response speed will be the key to success or failure." An industry analyst pointed out.

Future Imagination of "New World Factory"

Despite challenges such as insufficient infrastructure and shortage of technical talents, the potential of Southeast Asian manufacturing is still optimistic in the long term. The implementation of RCEP (Regional Comprehensive Economic Partnership Agreement) has further opened up the regional supply chain, and the global trend of "nearshore outsourcing" has also made Southeast Asia an important option for multinational companies to diversify risks. For the pneumatic components industry, this competition is not only about the transfer of production capacity, but also about the early positioning of the new track of intelligence and greening - whoever can take root deeper in the "New World Factory" will have the opportunity to dominate the rules of the game for the next generation of industrial automation.