Manufacturing is the foundation of an economy and has an important role in the history of industrial development. It is also seen as an engine of economic growth. China’s manufacturing sector has grown exponentially over the past seven decades, especially during the 40 years of reform and opening-up. It has gotten to a point where Wikipedia described “Made in China” as one of the best-known expressions in the world, found on labels in a vast array of goods, from clothing to electronic products. Su Shiwei specially for the Asia Times.
However, China’s manufacturing industry is currently facing some challenges, with high-end manufacturers moving to developed countries and low-end ones migrating to less developed countries to reduce costs. So there is a concern now that “Made in China” will be gradually be replaced by “Made in Mexico” or “Made in Cambodia.”
First, let’s look at what “Made in China” is.
“Made in China” was a product of a specific era, environment and conditions. It occurred when the world was keen to maintain peace and development while China was opening up a relatively stable economy.
Not every nation can grab such opportunities, but the hard work of Chinese leaders and workers helped create the foundation of “Made in China,” with not only an array of goods and growing wealth but also a combination of ideas, beliefs and actions. “Made in China” became a brand that raised the confidence of Chinese people over the past 40 years.
Second, it may seem that “Made in China” succeeded mainly because of the country’s advantages of low costs, low wages and a strong workforce. However, the national system and culture also played their parts. This development was supported by China’s overall strength. Millions of laborers have carried their hopes and dreams and made silent contributions to “Made in China.” They should never be forgotten.
Third, “Made in China” keeps upgrading. Over the past five years, China’s advantage of low costs has weakened. According to a report published by the Boston Consulting Group in 2014, China’s manufacturing cost index was 96, compared with 100 in the United States.
In recent years, developed countries in Europe and North America have started focusing on high-end manufacturing industries with campaigns such as the US’ National Network for Manufacturing Innovation, Germany’s Industry 4.0 and Britain’s Made in Britain 2050. Despite their different focuses, these countries are striving for leading status in the global manufacturing sector.
That led to the creation of “Made in China 2025.” Many Chinese cities have launched plans to upgrade their manufacturing sectors. And although some plans are duplicates, they will definitely help upgrade “Made in China.”
But whether “Made in China” will be replaced depends on a variety of factors.
Human resources remain the core
China makes all sorts of products from nuts and bolts all the way to 5G (fifth-generation) telecom equipment. It is not easy to classify high-end and low-end products in the broad spectrum of “Made in China.” Production requires a long-term accumulation of know-how. Human beings cannot be completely replaced by robots. Accidents cannot be forecast by computers. Human resources will remain the core of “Made in China.”
It is true that labor-intensive manufacturers may move from China to countries in the Association of Southeast Asian Nations (ASEAN). However, some of these countries, such as Vietnam, also face a drastic increase in wages. They must upgrade their infrastructure, logistics and power supply systems.
For the moment, it is unlikely that other countries will replicate the success of “Made in China,” as they don’t have political, economic, technological and cultural environments like China’s.
This article was first published on ATimesCN.com and was translated by Kamaran Malik.
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Su Shiwei is a researcher at the China Strategy Institute of Ocean Engineering and professor at Shanghai Jiao Tong University. He has PhD degrees in engineering, military and political science and contributes to the research of China’s strategies of economic and technology development. He is also a researcher of the Shanghai Pudong Pilotage Project. Previously, he was a colonel in China’s air force.