The most popular cost advantage is no longer the c

2022-07-26
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The cost advantage is no longer the competitiveness of China's manufacturing industry or has dropped to the second place in the world

in 2016, China's manufacturing industry still ranked first in the world. However, five years later, with the strong return of American manufacturing, China's manufacturing industry may lose its top position in the world

on April 1st, 2016, employees of a mechanical equipment manufacturing enterprise were processing mechanical equipment in Huaibei City, Anhui Province. Photo source: a report released by Wuhe/Vision China on Wednesday shows that in 2016, China's manufacturing industry still ranked first in the world. However, five years later, with the strong return of American manufacturing, China's manufacturing industry may lose the top position in the world

the above report entitled "2016 global manufacturing competitiveness index" was jointly released by Deloitte and the U.S. competitiveness Commission. Its research was based on research visits to more than 500 manufacturing CEOs and executives around the world. In 2016, the top five countries in manufacturing competitiveness were China, the United States, Germany, Japan and South Korea

the CEOs interviewed agreed that advanced manufacturing technology will be the key to releasing future competitiveness. For example, prediction and analysis, physical and material connected networks (also known as IOT), industry 4.0 characterized by intelligent products and intelligent factories, and advanced materials are all crucial factors for the development of global manufacturing competitiveness

According to the data of the third-party test report, the research points out that advanced technology and innovative development will be the main characteristics of the future manufacturing industry. The manufacturing industry is currently in a stage of sustainability, intelligence, security and rapid rise, and the United States will be the leader in the transformation of this industry

Tim Hanley, leading partner of Deloitte global consumer and industrial products, believes that: the United States is developing advanced manufacturing and calculating cross-sectional area technology based on this value, including intelligent interconnected products and factories; At the same time, the United States is also a world leader in forecast analysis and advanced materials, and these factors are the core competitiveness in the future

the global manufacturing competitiveness index is published every three years. Global executives say that talent, cost competitiveness and labor productivity are the three most important factors driving the competitiveness of the manufacturing industry. In the three reports in 2010, 2013 and 2016, thanks to the cost advantage, the competitiveness of China's manufacturing industry ranks first in the world, worthy of the title of world factory

since 2010, the competitiveness ranking of five important manufacturing countries has changed. Data source: Deloitte

however, the development of manufacturing industry is paying more and more attention to the other two factors. The competitiveness ranking of the US manufacturing industry will rise by one every three years, from the fourth place in 2010 to the second place in 2016. Deloitte and the U.S. competitiveness Commission predict that by 2020, the United States will surpass China in terms of manufacturing competitiveness, ranking first in the world

in the past, the rapid growth of China's manufacturing industry benefited from urbanization and demographic dividend. In addition, China itself is a strong raw material supply base and has better infrastructure than other neighboring countries. Over the past decade or so, China's manufacturing industry has also seized the opportunity of the rise of the middle class to achieve its own development with the continuous improvement of residents' disposable income. It has developed from primarily producing cheap goods to building a complete industrial chain

however, the demographic dividend has gradually disappeared. In October last year, the government further relaxed the one-child policy that has been in place for more than 30 years, allowing all Chinese to have two children, for fear that Chinese society will grow old before it gets rich. Domestic labour costs have been rising over the past decade. From 2005 to 2015, the compound annual growth rate of labor cost in China's manufacturing industry reached 16%. Worried about rising labor costs, multinational companies in some developed economies are shifting production to lower cost Southeast Asian countries or moving back to their own countries

innovation and regulatory efficiency also pose problems. From 2000 to 2014, the proportion of China's total domestic R & D expenditure in GDP has increased from 0.9% to 2%. In absolute terms, R & D expenditure increased from US $41billion to more than US $340billion. In fact, in terms of R & D expenditure, China is second only to the United States, and the number of patent applications is second only to the United States and Japan

nevertheless, the implementation of intellectual property protection law is worrying. According to the data of the American Chamber of Commerce, in terms of intellectual property protection, China ranks behind Russia and many other emerging economies, but before India and Brazil. In terms of regulation, the research of the world bank points out that China lags far behind other large economies in policy formulation and implementation

China's manufacturing industry is facing reflection due to the slow reform and transformation. To the extent that the wind turbine blade industry consumes more than 1million tons of composite materials every year, the the Belt and Road initiative, supply side reform and other policies can help the manufacturing industry dispose of excess capacity, but China still needs other measures to fully catch up with the manufacturing powers and improve its position in the global value chain, as long as we carefully read and implement them

dongweilong, managing partner of Deloitte China's industrial products and services, said: the Chinese government has noticed the challenges faced by China's manufacturing industry, and is vigorously promoting the plan of made in China 2025 and Internet + and implementing relevant measures

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