China’s Manufacturing Sector – Past, Present and Future

Today, China is believed to be one of the biggest manufacturing economies. Driven primarily by its capacity to provide low-cost labor and raw material, China progressed across a wide range of other competitive drivers including economic policies, infrastructure and settled logistics and supply network. There is no denying the fact that China started from small-scale industries in the past but eventually evolved its production and industrial capabilities from economical goods to high-end advanced products.

An interview with a Chinese entrepreneur who owns FrontechChina - Manufacturer of Brake Pads highlighted that China is currently at a turning point as it is striving hard to maintain its cost advantage at the same building more intensive capacities that are needed for high-scale advanced manufacturing procedures.

A recently conducted Caixin survey demonstrated the massive rise in China’s manufacturing activity. According to the Caixin China General Manufacturing PMI, the manufacturing sector’s operating conditions elevated to 5.17 in October that hasn’t been this high since past three years.

China, being the biggest exporter of the world’s overall production, shipped over 18% of its exports to the US in 2018. Currently, $34 billion worth of goods are subject to taxes (roughly 25%) that forced some businesses to start looking for manufacturing opportunities outside China. However, China still offers some of the most low-cost high-quality products worldwide. 

Noticeably, China is certainly the most important manufacturing producer as it sell a huge range of products than any other developed or developing country in the world. What sets China’s manufacturing sector apart from rest of the world is Chinese manufacturer’s tendency to produce different types of goods. Particularly, if you’re looking to build a personalized product for your business purpose, you will save a lot of time and money by collaborating with a Chinese producer who specializes in your product category and is aware of the ways to producing the high-quality product in the best possible cost.

Country Specializations

As mentioned earlier, Chinese manufacturers are preferred worldwide because of their proficiency and expertise in producing a vast range of products. Some of China’s most popular product categories include:

• Electrical appliances: The country’s ‘Made in China 2025’ objective is to revamp China’s machine industry particularly electrical appliances

• Clothing: Currently, there are more than 100,000 garment factories in China, contributing sufficient in terms of tariffs to the Chinese economy

• Automobile parts: China houses almost all the leading automobile parts manufacturers. Also, Chinese automobile parts and accessories are exported worldwide 

• Furniture/lights (solar lights): China has been the prominent exporter of furniture worldwide. Also, Chinese solar solutions has gained substantial momentum all around the world in past few years 

• Cases/handbags: The net revenue in China’s handbags, cases and accessories amount to over $37 million and is projected to grow by massive 14.5% annually

Despite growth and momentum, Chinese manufacturers are also concerned about tough tariff policies that has obstructed their way to experiment more with new products. According to a Chinese entrepreneur who runs NewWayBag - Manufacturer of Cotton Bags Wholesale, the economic growth that China achieved by opening marketing and executing reforms has depleted and the country definitely needs some major breakthroughs to incite a new round of achievements.

The Cost Factor

Although China is still a developing country in records of WTO, it’s also a fact that its economy is one of the biggest and most powerful one in the world. The country is becoming more industrialized and self-sufficient in various technologies and manufacturing capacities, which has basically forced the nation to make bigger plans like ‘Made in China 2025’. 

It’s noteworthy to mention that before all these economic initiatives, the wealth in china was widely unequal. Today, as the country begins to upgrade numerous sectors of its economy and is also paying attention to introducing more advanced technology and machinery to its manufacturing sector, there’s a noticeable difference in the wages. 

Production Capacities

Most Chinese producers need a high MOQ, Fixing a high volume order outweighs the cost of production for the producer but the minimum order quantity becomes smaller. Items like glassware or stuffed toys may have a MOQ of 1000/1500 pcs, while more extravagant and pricey products could have a MOQ of 200-300pcs. 

Recommendations

According to an emerging Chinese entrepreneur who owns SunEcoChina - Manufacturer of Solar LED Street Lights, China cannot let go its core competency that is low-cost production. However, policy makers should guide and encourage private enterprises to unearth different ways to fulfill the diverse needs of consumers worldwide. 

All in all, the manufacturing sector in China has evolved greatly in recent times. The role of foreign interest and investment is also massive as foreign investors are showing more interest in pouring their finances in the Chinese economy. Now, it all depends on Chinese policy makers that how or when they provide long-term financing benefits to the emerging entrepreneurs. The fiscal policies should also hold finances for R&D and the finance authorities must find ways to reduce tariffs and duties on products that are bringing in revenue to the country.