IA: China churns out top ratings as world’s factory
July 30, 2013
This time we discuss an article posted by South China Morning Post (2013-05-14) about China’s competitive edge and opportunities for the coming years.
Based on recent studies conducted by KPMG’s research in November last year, the article states that despite the increasing labour costs and worker shortages, China still churns out top ratings as world’s factory.
“The survey, conducted by global accounting firm KPMG in November last year, said respondents from Japan, Germany and Britain (three of the five largest economies) had chosen the mainland as their top sourcing destination after their home bases. The United States chose Canada, followed by China. The 335 respondents surveyed by KPMG were senior executives from five industries, including aerospace and defence, engineering and manufacturing, and automotive.”
In contrast to past decades, Chinese companies were focused on low-cost production, mostly merchandise as machinery and transport equipment, textile, rubber and metallurgical products. In 2011, merchandise trade accounted for 91.5% of their total exports. Alex Shum, a partner at KPMG China, states that China will continue being a magnet for global manufacturing companies.
“Under the 12th five-year plan, the Chinese government’s policies remain on course in terms of favouring investments in high-end equipment manufacturing, hi-tech, energy-efficient products and new materials sectors.”
Senior economist at ANZ Bank, Raymond Yeung, predicts that China can maintain its importance as a top sourcing destination global companies over the next decade despite rising competition in Southeast Asia and Latin America. He thinks supports the notion that existing relationships between Chinese and Western companies will play a decisive role in this.
The development that Chinese manufacturers are undergoing is concluded perfectly by Yeung: “Chinese manufacturers are undergoing a structural change. They are now pursuing high technology for value-added products. It’s different from the past when Chinese companies focused on low-cost production.”