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A recent survey published by the Wall Street Journal showed that blue collar manufacturing wages in China are now three times those in Vietnam. While workers in China are paid base salaries averaging about US$413/month, their counterparts in Vietnam receive an average of only about US$136/month. Monthly wages for factory workers in the Philippines and Thailand averaged US$170/month and US$246/month, respectively. These numbers reveal an important trend to which foreign companies manufacturing in Asia are increasingly paying attention: China is becoming more expensive.

Rising wages, labor unrest and problems with intellectual property rights have caused many companies to reconsider their focus on China as the primary manufacturing base in Asia. While there is no question that China will remain an important hub for manufacturing – with a likely shift toward more high-tech, sophisticated products – experts predict a significant shift in low-cost manufacturing to Southeast Asian destinations including Thailand and Vietnam. Ford Motor Company, for example, recently announced its plans to build an automobile manufacturing plant in Thailand – an investment worth over $400 million.

While Thailand and Vietnam offer significant savings on labor costs, other barriers to doing business in these countries do present challenges to foreign companies. Thailand has a relatively advanced infrastructure conducive to business efficiency, but has faced serious political tensions in recent months that have threatened safety and security. While Vietnam is relatively stable politically, the country's opaque legal system and high level of corruption are causes for concern among multinational companies operating there.

To its advantage, China has the abundant resources and manpower necessary to continue to have a major impact on the region. With a workforce of nearly 800 million in 2010, the country has more than three times the number of working age citizens than Thailand, Vietnam, the Philippines, Malaysia and Indonesia combined. Labor costs in China are also still significantly lower than those in the Southeast Asian nations of Malaysia (manufacturing wages averaging over $650/month) and Singapore (nearly $3,000/month).