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October 30, 2023

Southeast Asia Sectoral Cost Indices

Southeast Asia Sectoral Cost Indices

Flexport Research

October 30, 2023

Sourcing Costs Balancing Between China and Vietnam in the Third Quarter

*Flexport’s Southeast Asia Sectoral Cost Indices (SEASCI) helps to answer the questions of what comparative advantage looks like in practice and how costs are shifting across key supply chain sectors and countries. The latest report shows mostly converging costs in apparel and electronics. It also shows relative stability of costs for furniture and auto components. Finally, our measure for multi-sourcing costs between China and Vietnam showed balancing prices for apparel and furniture. *

The Methodology: Flexport’s Southeast Asia Sectoral Cost Indices (SEASCI) provides a comparison of the wholesale cost of U.S. imports for apparel, electronics, furniture and automotive components from Mainland China (hereafter China) and select countries in South and Southeast Asia. Calculations are based on identical stock-keeping units (SKUs) imported to the U.S. from each country available in the Flexport database for at least two quarters. While coverage may therefore change from quarter-to-quarter, our methodology is meant to minimize composition effects.

Update - October 30, 2023
The latest SEASCI includes data for Q3 2023.

Apparel: Converging Costs

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Wholesale costs of U.S. apparel moved towards each other for Bangladesh, China, India, Sri Lanka, and Thailand–a pattern that holds for all but Vietnam. Costs for the group are up between 1.5% (China) and 5.5% (Thailand) relative to 2019 costs (or 2020 costs for Sri Lanka).

Wholesale costs of U.S. apparel imports from Vietnam are the exception, down 6.5% year-over year and down relative to 2019 values, though very slightly up (<1%) since last quarter.

Apparel costs from India are down 2.0% from last quarter. China’s costs are up 1.2% from last quarter.

Thailand’s costs are down a modest 0.7% since last quarter.

Bangladesh’s and Sri Lanka’s costs both held steady relative to last quarter.

Furniture: Costs Remain Stable for All but Vietnam

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Vietnam’s costs are down 1.9% relative to last quarter and 1.9% year over year.

Among the other countries, costs changed little from quarter to quarter.

India’s costs changed less than 1% from last quarter but are up 7.6% relative to last year.

Taiwan’s costs are down less than 1% relative to last quarter and down 1.2% compared to this time last year.

Indonesia’s costs costs are virtually the same as last quarter and last year, with both changing less than 1%.

China’s costs are up 0.1% relative to last quarter and 1.35% relative to last year at this time.

Electronics: Malaysia’s Costs Increase Significantly, Costs From the Rest Decline Slightly

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Malaysia’s costs spring up 4.8% relative to last quarter.

Costs in Vietnam, China, and Taiwan were relatively stable. Vietnam’s costs are down 0.3% relative to last quarter. China’s costs are down 1.0% relative to last quarter. Taiwan’s costs are down 0.5% relative to last quarter.

Auto Components: Costs Tick up Slightly

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Key Takeaway: Vietnam and Taiwan stable and holding high relative to 2019 levels. China prices remain volatile recently but closest to 2019 values overall.

Some care is required in interpreting results with auto components, given the breadth of products it includes, ranging from steel-heavy components, such as body panels, to brake pads and airbags.

Taiwan’s costs and Vietnam’s costs both increased by 0.2% relative to last quarter.

China’s costs increased by 1.1% relative to last quarter.

Multi-Sourcing: Furniture Weaker, Apparel Stronger

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Comparing identical products sourced by the same company in the same quarter from China and Vietnam provides an overview of the import cost patterns of multi-sourcing firms. The dots in the figure above show individual multi-sourced products with the vertical axis scaled as the Chinese sourcing cost divided by the Vietnam cost for products that are sourced from both locations. The greater a point's vertical distance from 1.0 (up or down), the greater the ratio of costs the corresponding firm is paying for multiple sources of supply.

The solid lines represent an average of the dot readings.

When the lines are below 1.0 that is an indication that, within our sample, firms are willing to pay more to source from Vietnam or to source from both locations. One way to interpret the results for furniture (seafoam blue line) is that, over the past two quarters, firms became less willing to pay higher costs to source from Vietnam. In apparel, for just the last quarter, firms also became less willing to do the same. With both ratios pushing towards one and dispersion shrinking relative to last quarter, costs appear to be balancing across the two countries for the commonly produced goods.

An interesting pattern is beginning to emerge. While the seafoam and red lines in the middle may deviate from 1, the lines return in the direction of 1 quickly after any significant deviations. This pattern provides an alternative explanation for the spread of costs we see in the figure above: the spread of costs may be explained by firms continually rebalancing production decisions towards the relatively cheaper country in a world with varying import costs. We will continue to watch this closely.

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To illustrate the dispersion of costs over time, the above is an 80-20 plot of the quarterly cost ratios for both categories. This shows the difference between the cutoff for cost ratios in the top 20% and cost ratios in the bottom 20% each quarter.

It looks like the dispersion in apparel prices between China and Vietnam has disappeared to the tails of the distribution for this quarter. Similarly, the dispersion in furniture prices shrunk to its lowest level in 9 quarters.

Does this reflect a relatively stable cost environment, where firms have succeeded in optimally balancing their production across China and Vietnam to minimize costs for the time being? We will continue to watch this closely.

The Flexport SEASCI is published quarterly, with the next update - including data for Q4 ’23 - scheduled for January 2024.

Please direct questions about the Flexport SEASCI to

Disclaimer: The contents of this report are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. Flexport does not guarantee, represent, or warrant any of the contents of this report because they are based on our current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This report has been prepared to the best of our knowledge and research; however, the information presented herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this report.


Indicator Release Date Release
Southeast Asia Sectoral Cost Indices October 22, 2021 View PDF
Southeast Asia and Supply Chains July 22, 2021 View PDF

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Flexport Research

October 30, 2023

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