China's move up the value chain and the relocation of low-end manufacturing to cheaper countries will continue to create opportunities and support strong economic growth in some of Asia's "frontier" emerging markets.
The countries best-placed to take advantage over the next few decades will be those offering workable business environments and relative macroeconomic and political stability to complement low wages, strong demographics and geographical advantages, says Fitch Ratings.
China's rising wages, higher land costs and real exchange-rate appreciation over the past decade have reflected policy efforts to rebalance the economy and raise living standards, but they have also reduced low-end manufacturing competitiveness.
The average Chinese manufacturing wage is now higher than in Asia's other major emerging economies. Finding cheap labour in China is only likely to become harder, with urbanization rates already high and the working-age population set to shrink by 0.4% a year on average over 2015-2035.
A significant drop in China's low-end manufacturing over the coming decades would leave a large gap for lower-cost countries to exploit. China's global share of exports of clothing, footwear and furniture is still almost 40%, up from 34% in 2010, and only peaked in 2014, according to UN Comtrade.
However, the decline now appears to be gathering momentum - China's exports of these labour-intensive goods fell by 10% in US dollar terms in 2016.
Bangladesh and Vietnam already have strong footholds in these sectors - together they accounted for 8% of global clothing, footwear and furniture exports in 2015, up from 3% in 2010. This established scale could be an advantage. Bangladesh, for example, has a ready-made garments industry that accounts for over 80% of its exports, and has the capacity to meet large orders swiftly.
Vietnam looks well-positioned to expand its basic electronics manufacturing further through the relocation of factories from China. In both countries the manufacturing sector is a key driver of the high and stable GDP growth rates that act as a rating strength. It is also an important source of export revenue, which supports external finances.
Bangladesh illustrates that low-end manufacturing success is not necessarily precluded by difficulties in the business environment - the World Bank's Doing Business Index ranks Bangladesh's business environment as one of the worst in the region. That said, its garment industry is dominated by local firms, and FDI inflows have remained low.
Moreover, Fitch views political violence, security problems and a loss of favor among foreign buyers, potentially resulting from renewed safety standard issues, as key risks to Bangladesh's garment industry and economic outlook.
Political instability and business-environment deficiencies already prevent some economies from making the most of opportunities stemming from China's development. For example, Pakistan's manufacturing output grew by only 4.3% a year in 2012-2016, compared with over 9% in Vietnam and Bangladesh.
Pakistan is building closer relations with China through the Belt Road Initiative, which could eventually help it become a base for Chinese firms seeking lower costs, but foreign firms are currently deterred by security risks and infrastructure problems, particularly electricity shortages.
Pakistan's infrastructure ranked 110th out 137 countries in the WEF's Global Competitiveness Index 2017-18, well behind China (46th) and Vietnam (79th), and on a par with Bangladesh (111th).
Myanmar is another frontier market that offers labor-cost advantages and has a workforce big enough to support a large-scale manufacturing industry. However, its continuing political problems - highlighted by the Rohingya crisis - nascent market system and poor infrastructure make it an unlikely manufacturing hub for the foreseeable future.