The geographical shift of the middle class will entail relocalization – World Economic Forum

The geographical shift of the middle class has implications for supply chains says The Future of Manufacturing, A World Economic Forum Report in collaboration with Deloitte Touche Tohmatsu Limited

The rise of demand centres in Asia, along with the typical costs that accompany more developed nations, will likely increase localization of production. Increasingly expensive logistics are leading some companies, such as Caterpillar in China, to turn to more localized production.

The erosion of labour-cost advantages is leading to more capital-centric production. One company, Foxconn, has announced plans to use more robots to cope with rising labour costs.

The implication of these rapidly growing middle-class population projections is that supply chains will need to respond to growing demand and rising costs in the developing world – especially as those population centres mature and hundreds of
millions of their citizens begin to enter the higher-consumption middle class and become a driving force behind the flow of manufactured goods around the world.

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