China Prepares for Trade Battle

"Chinese manufacturing has overwhelming superiority, multinationals will not leave" reads the headline at iFeng (中国制造有一个压倒性优势 跨国企业不愿放弃)

Facing a competitive threat from the United States (and possibly a protectionist threat) and the recent high profile move by Fuyao Glass, which moved jobs to Ohio, China wants to calm nerves.
In April of this year, Deloitte and the US Competitiveness Commission released the report "2016 Global Manufacturing Competitiveness Index" pointed out that in 2016 China was again listed as the most competitive manufacturing countries, but the next five years, China will decline to second Name, the United States hopes to replace China by 2020 and occupy the top spot. Global executives interviewed agreed that advanced technology is the key to unlocking future manufacturing competitiveness as manufacturing converges in the digital and physical worlds. The prestigious Boston Consulting Group (BCG) in 2014, "the global manufacturing cost competitiveness index" also pointed out that China's manufacturing cost advantage relative to the United States is currently less than 5%, facing enormous challenges.

In addition, the cost of global manufacturing industry in the past few years there have been greater changes. "Who would have thought ten years ago that Brazil was now one of the most expensive manufacturing economies, and that Mexico's manufacturing costs would be lower than China's? London is still the world's price of living and travel," the BCG's report said with surprise. But the UK has become the least costly manufacturing sector in Western Europe, while manufacturing costs in Russia and Eastern Europe have risen to almost the same level as in the United States.

...BCG released in 2011, "return to the United States," pointed out that the past two decades, China's overwhelming manufacturing cost advantage to the rapid decline of the US manufacturing industry. With the rise in labor costs in China, increased productivity in the United States and the depreciation of the dollar and other factors in the next decade, the United States and China's manufacturing costs will become very small.

Deloitte pointed out in the report, manufacturing competitiveness of the main driving elements of two. Talent remains the top priority, with manufacturers and executives also ranking talent as the most important driver of global manufacturing competitiveness. In the era of slow economic growth, in addition to building robust supplier networks and ecosystems, controlling costs, increasing productivity, and increasing profits are still important for manufacturers, in terms of cost competitiveness, productivity, and supplier networks. China as a traditional manufacturing power, the core competitiveness focused on production costs and supply chain aspects. In a cross-cutting comparison of the competitiveness of the US, Germany, Japan, Korea, China and India, the report cited India with a score of 55.5, slightly higher than 51.5, in talent competition.

The rise of the Power Five (MITI-V) is noteworthy in countries that want to take advantage of China's transition to developing low-cost manufacturing bases. Malaysia, India, Thailand, Indonesia and Vietnam, the five Asia-Pacific countries are expected to be among the top fifteen of the manufacturing competitiveness in the next five years. These countries have low labor costs, flexible manufacturing capacity, favorable population distribution and market, economic growth. According to the Deloitte study, China's competitiveness ranking in the next five years will continue to rise, while China continues to focus on higher value and advanced technology manufacturing in the manufacturing sector.
China has structural political and cultural advantages which will keep it competitive with the United States, namely that Chinese are willing to work longer and harder, with little social safety net, versus Americans who are relatively unwilling to work:
A senior Philips mechanical engineer on the Die Zeit reporter analysis: "From a rational point of view, China's labor resources or the United States has an advantage, first of all in the price.Secondly, even the United States has the same labor force with China, Now this social atmosphere will not form China's industrial scale, the problem is in the mentality, my previous company had tried to build the assembly plant in Silicon Valley, but soon found that Americans do not want to engage in labor Too strong, low level of technical work, and do not want to work overtime, the union is too strong, a little problem behind the duration will be affected, and later had to give up.

The article has this graph showing export manufacturing costs in 2014. China is on the left at 96, next is Germany at 121 and then the U.S. at 100, Japan at 111 and Korea at 102.

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