Abandoning sub-health, China's manufacturing rises in the high-end

Recently, Shenzhen-based foundry giant Foxconn sought to open a million-person factory in India, and rumors of Huawei moving out of Shenzhen also surprised other companies. The entire manufacturing industry seems to be permeated with a kind of Anxiety - even the manufacturing giants are adjusting their direction, and those in the low-end real economy are even more hesitant. Two years ago, when discussing policies and measures to promote industrial transfer and adjust the layout of key industries, Li Keqiang pointed out that it is necessary to comply with the laws of economic development, optimize the distribution of productivity, and guide the orderly transfer of some industries in the east to the central and western regions. It is of great significance to promote the development of new urbanization and poverty-stricken areas in the central and western regions, expand new space for employment and development, and promote the economy to jump to the middle and high-end level.

What is the current status of industrial transfer of Chinese manufacturing enterprises today?

To this end, "CEConline" has planned a survey on "Current Situation of Chinese Manufacturing Industry Relocation", and received more than 350 valid questionnaires. Among the enterprises participating in the survey, more than 60% have annual sales revenue of more than 60 million yuan; 80% of the respondents are department managers or above.

The stubborn disease of low-end manufacturing is difficult to heal

Undertaking industrial transfer from around the world, China's low-end manufacturing industry has insurmountable stubborn diseases, such as production technology content, quality standards, brand Consciousness, etc., under the two-pronged approach of labor cost squeeze and preferential policy attraction, continued transfer has become the only choice for these enterprises. The survey results show that 35 per cent of businesses that relocated domestically moved to other parts of the province and 32 per cent to the central region. Among the companies that moved overseas, more than 50% went to Southeast Asia, while India ranked second with 22%, which was a big improvement compared to living in China.

Among the reasons for the transfer of enterprises, reducing operating costs and obtaining preferential policies are at the forefront. The great achievements made in China before are mostly obtained by "hollowing out themselves", from huge orders around the world, It constantly stimulates people's unbreakable desires, hollowing out policy dividends, demographic dividends and resource dividends.

However, judging from the companies that have been transferred in the past few years, there are not many companies that really stick to the manufacturing industry, because profit-seeking is their primary goal, so when the financial real estate is hot, it is also difficult to change the runway. Just fine. "Many of my colleagues moved to the mainland for preferential policies such as land given by the local government. In the end, the production was not very good, but they started real estate business, and some engaged in financing. There are very few entrepreneurs who really focus on manufacturing and develop ideally. ." Sun Gang, general manager of Shenzhen Jingkexin Industrial Co., Ltd., told CEConline.

In addition to labor costs, the most important reason for the transfer of low-end manufacturing industries in the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen is the soaring housing prices. Due to rising labor, rent and raw material prices, Hong Kong garment and shoe-making companies that are very sensitive to cost and profit moved their factories from Hong Kong to the Pearl River Delta in the first 20 years, and now they have moved to Myanmar and Vietnam with lower costs . According to Liu Zhanhao, chairman of the Federation of Hong Kong Industries, about 5% to 10% of its member companies have already or are in the process of withdrawing from the Pearl River Delta. Zhang Weijie, chairman of the Hong Kong Footwear Association, said that when he visited Myanmar three years ago, there were only nine shoe factories in the country, but now it has attracted as many as hundreds. In the past two years, Zhong Guobin, chairman of the Hong Kong Garment Industry Association, has led dozens of Hong Kong enterprises in the Pearl River Delta to Myanmar to investigate low-cost low-cost low-cost land. At present, nearly ten member enterprises have invested and opened factories in Myanmar.

Is it true that the high-end manufacturing industry in the United States and Japan is returning?

The cancellation of "super-national treatment" in taxation, land and other policies, rising labor costs, improved supervision, and the rise of local companies have led to more and more foreign companies choosing to withdraw from China. Japanese home appliance manufacturing giant Panasonic announced that it would move the production of high value-added home appliances such as washing machines, microwave ovens, and induction cookers from China back to Japan. More than 60% of the respondents believed that the main reason was related to the increase in labor costs in China. Few people think it is related to political factors.

Multinational companies such as Uniqlo, Nike, and Samsung have also accelerated their withdrawal from China, opening new factories in countries with lower labor costs, such as Southeast Asia and India. In addition to labor costs, more than 60% of the respondents believe that the most important reason for these foreign-funded enterprises to move out of China is the rising cost of resources.

From the perspective of China's manufacturing development environment, wage growth is much higher than labor productivity growth, resulting in a rapid increase in the relative cost of labor. At the same time, rising energy costs, deterioration of investment and financing environment, low product quality, and hidden Many factors such as high cost and risk have also become the main reasons for the capital relocation of multinational enterprises. In the past two years, the US government has formulated a number of policies to attract the return of manufacturing industries. Recently, President Obama personally attended the Hannover Messe in Germany, revealing that the US and Germany will become business partners in reindustrialization. Fifty percent of the respondents believe that, except for a few high-end manufacturing areas where China can enter the top three in the world, other industries are still controlled by others. 36% of people believe that the core technology of high-end manufacturing is still in the hands of the United States, Germany and the Japanese, and China can only make efforts in the middle and low end.

Among the companies surveyed, 7% chose to enter Japan, the United States and other high-end manufacturing powerhouses. Among them, there are not only foreign companies returning, but also Chinese companies going to the local market to do marketing, design branches and even manufacturing plants. Liu Baohong, a columnist for CEConlines and an expert in supply chain management, told reporters in an interview, "The U.S. government has made plans to attract manufacturing The policy of repatriation looks very attractive, but its effect is not significant. This is more of a game of politicians. Back then, companies outsourced too much. In order to please voters, provide more job opportunities, and make moves to attract manufacturing. However, there are not many North American companies that have actually returned. The cooperative spirit of Chinese manufacturing companies is good, and it is difficult for the supply chain to migrate as a whole.”

The United States’ policy of returning manufacturing industries focuses on cultivating innovation capabilities. , from the perspective of enhancing competitiveness. Strengthening the global competitive advantage in the high-end manufacturing field, rather than strengthening the direct intervention of industrial policies, its policy idea of "reducing the cost of enterprises and improving the competitiveness of enterprises" is worth learning and learning from China.

Responses to both the symptoms and the root causes

The survey found that 35% of enterprises that relocated out of the province chose to transfer within the province, indicating that in the process of responding to the increase in manufacturing cost factors, enterprises have Considering the difficulty, the first choice is still nearby. In January of this year, the Dongguan Municipal Government and Huawei signed the "Huawei Capital Increase Project Investment Agreement", and Huawei's terminal headquarters, which mainly develops and produces mobile phones, tablet computers and other terminal products, moved to Songshan Lake, which suddenly triggered a dispute between Shenzhen and Dongguan. In fact, Huawei's scale is getting bigger and bigger. There are more than 60,000 employees in the Shenzhen headquarters, and 16,000 employees in the mobile terminal industry department in Dongguan. Shenzhen's land resources are so scarce that the house price in Bantian has reached 50,000 yuan/ Square meters, the operating costs of enterprises are getting higher and higher, and the manufacturing industry in Dongguan is shrinking, and enterprises urgently need to move in. It is also normal for Huawei to transfer some of its business to Dongguan.

It can be seen from the survey results that 45% of the interviewed companies have relocated their manufacturing plants or production departments, and 35% have established branches in other places. After the industrial transfer of the enterprise, the most helpful to improve its competitive advantage is to reduce labor costs, obtain local preferential policies, and be close to the market and customers.

Premier Li Keqiang emphasized at the relevant meeting that to promote the transfer of industries from the eastern coastal areas to the central and western regions, it is necessary to give the central and western regions the proper dynamic support. First of all, it is necessary to do a good job in the infrastructure of transportation, information and talents, and use a good "hard environment" and "soft environment" to undertake the transfer of eastern industries. On the premise of ensuring that the environment is not polluted, it is necessary to actively and orderly guide the transfer of industries in the eastern coastal areas, and guide 100 million people to urbanize nearby the central and western regions. However, after the relocation of factories or enterprises, only 15% of the enterprises have gained a relatively large competitive advantage, and more than half of the enterprises are not as productive as before. It is believed that re-layout and overtaking on curves can be realized after industrial transfer.

Strengthening mid-to-high end to reshape the territory of Chinese manufacturing

For those leading Chinese manufacturing companies, brand globalization and how to attract top global talents are their current considerations The problem. On July 12, 2016, the Jimu robot of UBTECH ROBOTICS was released exclusively in some Apple Stores around the world, and it can also be purchased directly from Apple.com. In an interview with "CEConline", Zhou Jian, chairman and CEO of UBTECH, said that this year he moved industrial design and underlying basic technology research and development to the US branch, and the Chinese company was responsible for production and other cooperative development. Build technical barriers. At the same time, he is considering the acquisition of an overseas technology research and development institution to enhance its unique competitiveness in the industry.

DJI's R&D center in Silicon Valley recently hired former Tesla R&D team executives Darren Liccardo and former Apple senior engineer Rob Schlab (Rob Schlub) and other technical elites to join. In addition, many manufacturing companies that started out in foreign trade are also considering acquiring mature brands or manufacturing plants from Europe and the United States to quickly complete their global layout.

Liu Baohong pointed out that the advantages of Chinese manufacturing lie in the supply chain and ecosystem, and the transfer of low-end manufacturing is a good thing in the long run. Long-term pain is worse than short-term pain. Let those "porter" companies that only compete on price and squeeze suppliers and employees leave, and concentrate resources and capital to become a good company with innovation, brand and profit margins.

Management consulting expert Liu Chengyuan described such a map of the future of China's manufacturing industry: the national system plus the industry in the north, focusing on learning from Germany for equipment manufacturing; private enterprises in Jiangsu, Zhejiang and Guangdong learning from Japanese manufacturing, because All of these private enterprises hope to be a century-old shop, and then pass it on from generation to generation; Shenzhen, Dongguan, Xiamen and other places have developed electronic technology, and makers gather together to compete with Silicon Valley in the United States. The pain before the rise of Chinese manufacturing is inevitable. It is trying to adapt to the requirements of internationalization. Automation, mechanization, and industrial Internet have all been put on the agenda.

In economic globalization, the cross-border flow of industrial and financial capital has also become the norm, and the decisions of enterprises in various aspects such as R&D, production, and operation need to be considered on a global scale. Whether it is the repatriation of manufacturing in the United States or the entry of Chinese companies into Europe and the United States, it is essentially an investment or layout adjustment decision made by companies based on the consideration of competitiveness and after a comprehensive analysis of costs, risks and other factors between transnational regions.

For local governments, the competition to undertake industrial transfer is mainly reflected in creating a better development environment for enterprises. It is necessary to do everything possible to reduce investment costs and tax burdens such as capital and energy, so that enterprises can concentrate on improving. Its profit margin and market competitiveness.