Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Regina Chi is vice-president and portfolio manager, AGF Investments Inc.

It’s no secret, globalization has peaked. You might even say it’s on life support.

And given that it is responsible for generating untold trillions in shareholder value over the past few decades while lifting hundreds of millions out of poverty, it’s little wonder so many bemoan the near future as capital retrenches around the world.

Story continues below advertisement

Yet it’s not all bad news for investors. In fact, there appears to be a silver lining as Asia’s emerging economies rush out their welcome mats, positioning themselves to reap the spoils of China’s woes – from continuing trade wars and rising tariffs, to the swell of populism.

Countries such as Vietnam, Thailand, Indonesia and India are now poised to become the next wave of winners as decades-old relationships are remapped, and new ones forged. However, investors looking for a long-term play would be wise to consider each country as its own asset class, each with its own economic policies and drivers of growth.

How did we get here?

While globalization has been underway since the birth of the telegraph and emergence of transcontinental railways, it has waxed and waned over the centuries. However, the most recent wave truly gained momentum following the implementation of the North American free-trade agreement in 1994, when U.S. car manufacturers outsourced much of their labour to Mexico and, similarly, after China’s admission to the World Trade Organization in 2001.

For decades, China built its economy as the world’s factory floor for cheap goods. However, over the past decade, China has been undergoing an astonishing transformation – from serving as an imitator, to a country focusing on moving up the value chain through technology advancements, thereby threatening the global order and the United States’ dominance.

This has created a domino effect in local, emerging markets – a shift that has already been well under way but is accelerating in the wake of continuing trade wars as affected global businesses seek to reorganize their manufacturing investments to avoid U.S. tariffs on Chinese exports.

Tomorrow’s emerging market players

Vietnam’s industrial parks have been quietly filling up as companies look to hedge against rising political uncertainty. One of the world’s fastest growing economies, Vietnam has recently opened its doors to the world and boosts several advantages over its neighbours in Asia. Firstly, it is located next to China, making for convenient shipping. Consider that it is also cheaper than Malaysia, more stable than the Philippines and Thailand, and more accessible than Indonesia.

What’s more, Vietnam’s factory workers earn about half of what workers earn in China’s big manufacturing zones. And with about 70 per cent of its citizens under 35, and with more than one million joining the labour force every year, according to the World Bank, Vietnam has a steady flow of low-cost labour for the near future.

Story continues below advertisement

Meanwhile, some see the global trade wars as a second chance for India to realize its growth potential, based on its scale in terms of power generation, structural availability, favourable demographics and the spate of new reforms announced in recent months. While the country’s current economic woes have been widely telegraphed, the Indian government is implementing a number of stimulus measures designed to jolt the moribund economy while attracting new foreign investment.

The government recently announced steps to liberalize foreign direct investment regulations in manufacturing and retail sourcing, lowering the tax rate of 17 per cent and now allowing 100-per-cent direct foreign investment in contract manufacturing in the auto sector. Importantly, this latter move will help India establish more integrated supply chains based in the country.

Indonesia and Thailand are also poised to benefit from moves out of China. Indonesia is well-equipped to undertake some of China’s manufacturing capacity with 42 per cent of the population under the age of 25, World Bank figures show. The government recently announced it will open up new sectors of the economy to foreign investment and introduce labour reforms by year’s end. Some companies, such as Delta Electronics Inc., a Taiwanese-based electronic manufacturing company, already had a subsidiary in Thailand before the U.S-China trade spat deepened. It now plans to continue to build capacity in Thailand, as well as grow a footprint in India.

And Delta Electronics isn’t the only company with a head start in uprooting from China. Eclat Textile Co., a Taiwanese-based textile manufacturer working with companies like Nike Inc. and Lululemon Athletica Inc., already has much of its garment capacity in Vietnam and has plans to build new fabric plants in Indonesia. Meanwhile, other companies such as South Korea’s Samsung Electronics Co. Ltd., which has pulled its mobile phone production out of China altogether, are also likely to gain market share from the fallout from the U.S. government’s trade ban on companies such as Huawei Technologies Co. Ltd.

The views expressed are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. References to specific securities should not be considered as investment advice or recommendations. AGF owns stock in Eclat Textile Co., Delta Electronics Inc., Nike Inc., Lululemon Athletica Inc. and Samsung Electronics Co. Ltd.

Editor’s note: An earlier version of this article incorrectly said Samsung Electronics Co. Ltd. had pulled all of its production out of China. In fact, South Korea-based Samsung no longer makes any mobile phones in China, but still produces some memory chips there.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies