The future of manufacturing in China
China is changing so fast, and the factory of the world is becoming more and more advanced. For those familiar with China’s last 15-20 manufacturing years, the change that is happening does not surprise them. This change occurs on several levels, and in some cases occurs at breakneck speed. Indeed, when the Chinese government wants something, the speed at which the project is being carried out is impressive and unrealistic in the eyes of the Western world.
I) The growth of a global power
According to Bloomberg (U.S. financial group), China’s GDP will exceed that of the United States in 2028. Also, the recently announced and much-vaunted Belt and Road Initiative (a set of maritime links and railways between China and Europe) is driving a future policy that will elevate China to the status of superpower global trade.
Also, China continues to increase its investments in the rest of the Far East (including emerging economies) such as Southeast Asia, South America, and Africa.
Of course, their appetite for US and EU assets is also evident.
Finally, it is estimated that by 2022, more than 550 million people in China will belong to the middle class. This would make this Chinese class alone large enough to be the third most populous country in the world.
II) Chinese manufacturing companies
The central government continues to limit the amount of manufacturing within the limits of the city of Shanghai while the price of real estate continues to grow but at a slightly slower pace. Suzhou is also beginning to limit and encourage manufacturing movement to lower-cost areas, such as Zhejiang Province while being close enough to labor and population centers.
In 2018, 15 Chinese provinces have raised their minimum wages, including Guangdong Province, Hubei, Shanghai Municipality and Beijing. Further increases are expected for 2019, particularly in the municipality of Chongqing.
A) The example of the city of Shenzhen
Shenzhen continues to amaze with its desire to become one of the world’s largest cities, rivaling other major Chinese cities such as Beijing and Shanghai, and even other global cities such as London and New York.
Local governments have a master plan and continue to work to make Shenzhen the “Silicon Valley” of the Far East.
The city is on the right voice with the help of Chinese technology powers such as Huawei (information and communication technologies), Tencent (specialized in internet and mobile services as well as online advertising), and Alibaba ( designed to facilitate business-to-business exchanges with payment and retail platforms, a search engine for shopping and cloud computing services).
Also, many foreign multinational technology companies have set up their headquarters in Shenzhen.
As a result, the rapid rise in Shenzhen’s real estate values, the establishment of technology companies, and the move to a more innovative economy focused on AI (artificial intelligence), robotics, and other high-tech markets are driven by manufacturing companies to relocate to the delta in Dongguan or other cities outside Shenzhen.
B) From “low-cost labor” to technology leader
With rising wages and rising social compliance costs across the manufacturing sector, China has inevitably embraced industrial automation.
Now the country wants to trade its label of “low-cost workforce” for that of “technological leader.” Since 2015, China has embarked on a 10-year national plan called “Made in China 2025.”
With this plan, the country aims to become one of the best industrial technology countries in a few years. However, to reach Beijing’s goal of 150 robot density by 2020, some 600,000 to 650,000 new industrial robots will need to be installed across China.
Lead generation in China is also a big thing for factories that want to automate their sales channels and get more revenues.
The country’s goal is no longer just to be the world’s leading manufacturer but also to become one of the best industrial countries in the technology sector.
As a result, companies will no longer have to see China just as a country with a low-cost workforce; but rather as a country with innovative capacity in the technology sector.
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