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Guest lookdadnotunes

Manufacturing In China

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Guest lookdadnotunes

As part of my business unit for my degree in Product Design I am writing a research paper on manufacturing in China.

Looking at:

* the origins of outsourcing, how and why it became desirable to outsource to China. Covering the reasons most of us are familiar with. Artificial suppression value of yuan by Chinese economy by the government. Tax breaks/ incentives offered by Chinese government.

 

But then moving on to look at issues today such as:

 

*Chinese Government's desire to move from 'the worlds factory' into a more specialised, high tech innovator.

* Tighter clamp down on pollution and manufacturers responsibilities, narrows the profit margins on low tech, high polluting industries.

*Intellectual property scares, in some cases businesses not prepared to divulge all their manufacturing processes to one manufacturer, choosing to spread the process amongst a few, in order to stop IP theft. 

*As China's middle class expands, young people are not aspiring to work in factories, rather aspiring to University education, leading to a possible labour shortage. As well as aging Chinese population

* Tax rebates recently reduced by Chinese government.

 

* Could we see a wide-scale migration to other low-wage economies where does the future of manufacture outsourcing lie?

 

 

My question to you guys is does anybody with experience of manufacture outsourcing to China have any points to add, or would be prepared to take part in a structured questionnaire/email interview to give their experiences of outsource manufacture to China?

 

Many Thanks

 

Robert

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I am not that smart, or smart at all, but here is my 5 cents anyways. I truly believe that China has a bright future for her next 30 -40 years. China is accumulating wealth, and her export /import balance is positive. The surplus is wisely used, and China builds new powerhouses, infrastructure etc, which allows her wisely to increase manufacturing capacity. What is important China has a very big ratio of manufacturing /services in her GDP which means China creates a lot of added value to her economy. If value to GDp is cretaed by ( complex)manufacturing it means it must involve skilled labour, thus it implies stable salaries( skillz4 billz). If the economy gravitates too much to services, there is no necessity for high salaries, because there is always an easy and fast way to find a cheap substitute,.

I believe that aging won`t be a problem for China for upcoming decades, because 1 child policy was established not that long time ago, and having a resource of 1.3 billion people there is always a big selection of labour force. Although salaries in China are constantly increasing, I also believe that the huge human resource pool that is still available in rural areas will slow down that tentency. The tendency will be slowed down further by collapse of US, as demand will shrink.

As to why manufacturing was outsourced to China? 1.3 billion people, that is a very big competition for a salary in a factory, ;there will be always someone ready to work for a lower pay in China.China has one of the highest scores in exact sciences in schools, which is a predominant to create complex items and mechanisms. Chinese are hard working and punctual. This is the best soil to create the biggest added value whether to an outsourced company or to the local one. No matter how low a salary can be pushed down in Angola, you simply won`t see Gm labs there, for a simple reason- lack of excellence in (precision sciences )and natural sciences.

And As salaries increase China should not be afraid of migration of outsourcing. Firstly, China herself will soon have accumulated enough expertize that she even won`t care, if western companies are fleeing away to lower paying countries. Secondly, China has a huge advantage in exact sciences, while most of countries wtih low salaries don`t. Of course you can send the whole Buick unit to Pakistan, but will you be able to scramble enough skilled workforce to do meticulous engineering? (Well, anyway, Buick is mostly engineered in germany by germans). Today China is the second largest econmoy in the world right after Japan, and it doesn`t matter if Us has created bubble GDp numbers to fake her economy size, China owns a large portion of US debt, which allows her to pierce through US protectionism of local market and manufacturing, simply delapidating US backbone of manufacturing and simply reaping enough profits on servicing the debt alone. China even doesn` t need an army, all they need is to hold their hand on the red button of `release the dollar reserve`. The money Us wastes on Army, China could wisely invest on Research and development. science, art and education.And it doesn`t matter, if China is communist , capitalist or alien, the law of relativity in economy is simple- if you create more value than you consume, you are destined for stardom.....

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Guest Bowl of Soup

We're already seeing some manufacturing move out of China, into Africa, Morocco, czech rep, etc. It's really a race to the bottom for some manufacturing. Mexico for it's proximity to the US market and for more advanced but still inexpensive manufacturing.

 

I think you are also going to see some trends with regards to regulation on the environment and work conditions, expect this to be also a race to the bottom.

 

I think this is a great topic, but China is HUGE and it is not easily generalised, there are so many different areas and realities to deal with.

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advanced boy keep the tone, stay focus on details and get rid off emtion side and soon you will become trust expert here

 

the answer given by You before boul of soup is well detailed and thought.

 

Frankly speaking - it was really valueable and intresting to read becasue you were way of of your personal, emotion driven insights which often makes you taken as too much self sensitive person

 

keep going, looking for more...

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Guest neoseikan

Will the manufacturing demands be kept in China, or move to other countries? That's also a hot topic in local forums. I am Neoseikan, a flashlight designer in Beijing, China. Some of my friends are quite worried about that problem, partly because of recent "salary increase" movement in China. For example, Foxconn just doubled its salary for hundreds of thousands of young workers.

But I always thought small enterprises in China might be able to keep their chances if the government do not apply any policies too stupid to rise the the market entering too high. Because young designers and engineers in China are so ambitious to keep in touch with business closely. The brain resources are in very good condition though still in a very low level, you can see the power.

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