visit us at https://blog.laowaicareer.comtweet us @laowaicareer

What’s occurring in the Chinese manufacturing industry?

You’ve heard the news.. China is headed for a

slowdown. What does that mean for manufacturing?

How can you take advantage of the changing conditions?

Click here to learn more!

With 40 percent of China’s annual GDP growth dependent upon exports, a

global downturn such as the one we are experiencing has had a significant impact on the nation’s economy and

security.

It is true to say that manufacturers have evolved over the past few years as more

companies start to shift part of their China production to the domestic market,

however, the general principle of China as a low-cost, export manufacturing center

remains the given assumption.

Manufacturing in China vs. The USA is aging, and this, coupled with the rise of

business in other developing manufacturing hubs like India and

Vietnam, signals a political urgency to correct the nation’s manufacturing

profile.

Moves to shift this balance upstream to added-value production, and to diversify away from this traditional, yet economically skewed

model, have only just started to be implemented, and with China struggling to cope with its reliance on exports, the China

slowdown has been sharp and in cases, severe.

While the Chinese government has announced measures to assist domestic exporters as part of its economic stimulus plan, this is only a short-term safety net as it encouraged its domestic

manufacturers to adapt and search for a wider basket of markets. In any event, such incentives are not available to foreign-owned businesses in

China.

The timing of some of China’s reforms has also been unfortunate. A tightening up of the labor law last year may well have kept much Chinese in jobs that would otherwise have disappeared during the downturn. While this represents a win situation for the government, it has led

many manufacturers and potential investors in China to think again.

A relatively comprehensive victory by the pro-business and foreign investment friendly Congress

Party suggests that India will rapidly become a major competitor for FDI dollars in the short-long term future. Barriers to FDI in India will likely be torn

down, the domestic market will increasingly open up, and massive infrastructure projects, previously

on the back burner due to the political horse trading will now be fast tracked.

Make no mistake, with a mandate to rule, the Congress Party in India will prove a

dynamic regional force in the redevelopment of India. Opportunities abound in the country, and it will see

growth at a rate that China did twenty years ago.

To cope with this, the priorities for China’s continuing development have to change. It simply cannot compete with India for much longer over cheap wages and export-driven

manufacturing cost index.

The implications for China are interesting. It means that it is demographically and

economically bound to follow a different route than the one it has for the past

twenty years. No longer can China afford to be simply a cheap destination for investing in export manufacturing.

Costs will continue to rise, and competition, in the shape of India and the tiger economies of Southeast Asia, has arrived. It means that investing in business opportunities in China has become increasingly dependent upon

servicing its domestic market. That, in turn, has huge implications for foreign investors.

Market research in China used to be somewhat perfunctory – a quick scout around which free trade

zone offered the best land costs, tax deals, and infrastructure. Quite clearly, this is no longer going to be enough. Setting up business to manufacture

and sell to China requires a detailed study: the local area dynamics, the local culture, and of course coming head-to-head with local competition.

While Beijing, Shanghai, and Guangzhou are all premium, yet market saturated cities,

selling to the China market will increasingly demand greater sensitivities. Opportunities in Xinjiang require an understanding of the local Muslim population; products need to

be marketed in a form of Arabic.

Selling in Chongqing requires studies of the transportation system down the Yangtze. Yunnan, with several types of minorities,

includes dealing with everything from Tibetan to Khmer sensitivities.

The economic factor will additionally start to raise its head, and the research needs to be spot on. Chinese competitors will always be

able to supply the domestic market at a lower price. Accordingly, foreign investors in China will need to provide a better quality product, position and market it correctly, and face the

threat of local companies evolving to compete.

The age of quality market research as a pre-investment tool in China has

arrived, and providers will need to be able to cover the entire country to be

able to provide accurate and comparable data.

Short-term, the Chinese government is going under pressure to reduce export costs.

However, with the stimulus package firmly geared towards generating a domestic demand, and competitors such as India

breathing down their necks, China’s exporters look set to be in the doldrums for some time

to come.

With 40 percent of China’s annual GDP dependent upon exports, the government is

clearly in danger of getting caught between two stools. To reduce that burden, pressure on the government by its export-driven businesses is likely to increase. Whether this manifests itself

in grants to exporters, or a climb down on some aspects of the labor law, is hard to pinpoint.

However, in keeping Chinese businesses and domestic workers

happy, the Chinese government risks losing its attractiveness as a destination

for manufacturing and export-driven FDI.

The implications for foreign investors require a change in the mindset away from China as a

destination for purely cheap; export-led manufacturing. India is increasingly going to take

over this role. China now represents a huge domestic market, but one that is still largely

unexplored regarding its massive interior populations, and one that will require patience, and

significant resources to crack.

“China has changed” is a familiar mantra that has been spoken over the years. It

continues to, and in moving up and away from its role over the past two decades

will increasingly demand a more sophisticated approach to its market that

has, until now, been the case.

Foreign investors in China, instead of just scouting around for cheap production, will now have to think carefully about their longer term position, and whether or not they want to be a

China business. At Present, China manufacturing is seemly an essential power in the economic world, and this has an especially

astronomical effect on manufacturing.

For a prolonged time, China was precise much an outsider comparison to Western

nations, but it is now processing all aspects of its society. The country and its people are becoming more westernized and similar in some ways to Europe and

countries like the United States.

For a long time, Chinese people were barred from traveling by their government. This is no longer the case, and their people’s influence

on other societies may be having an impact on their fast development. It has made some

people want to start businesses, while others have been pleased to follow the user society

of the west.

The first of manufacturing in China on a large scale was clothing and footwear. China was comparatively miserable the

price of labor was inexpensive than western countries. Many western

companies outsourced their manufacturing to the country.

They have moved more into electrical, computing and telecommunications products. Clothing and footwear are

still at the forefront of Chinese manufacturing, though.

China is manufacturing turn such an attractive proposition to organizations these days. When you look at a large

magnitude of the world’s manufacturing, you will notice that a significant amount

of it takes place in China.

The production that is being moved to the China manufacturing plants is to a satisfactory level for the organizations

otherwise, they would move their production elsewhere.

Click on the link below to read the full blog post! Don’t forget to comment, share, tweet…Or communicate with an advnaced alien

civilization that will share your message to us.

https://www.laowaicareer.com/blog/manufacturing-china-may-face

/

LaowaiCareer.comblog.LaowaiCareer.com

• Search Jobs• Register as a Job seeker.• Subscribe to our Newsletter, Job offers and Blo

gs• Read our blog