Re-Globalization and the Defense of Chinese Export Enterprises

At the end of last year, the Japanese government took the lead in promoting Japan to the world by placing an advertisement for attracting investment in The Economist magazine. Over the years, Japan has invested heavily overseas. This time, "going out, inviting in" is parallel, and it is taking the "re-globalization" route based on the revitalization of manufacturing. After Shinzo Abe was re-elected as the Prime Minister of Japan, he came up with a set of monetary policies that attracted international attention, stimulated the finances, depreciated the yen, and enhanced the competitiveness of Japan's exports. Set up funds, tax incentives, investment in equipment research and development, and develop overseas markets for small and medium-sized enterprises. Chinese companies and government authorities must pay attention to these changes in the external environment.

The recovery of the world economy after the 2008 global financial crisis has been slow. Developed countries such as Japan and the United States are deeply aware that manufacturing is an indispensable source of job creation; to reduce long-term unemployment, there is no cure other than revitalizing the manufacturing industry. Facts have proved over the years that high technology has not brought a large number of new employment opportunities, but has transferred jobs from developed countries to developing countries, which is fundamentally different from the industrial revolution of the steam locomotive. "Non-trade" service industries, except for a small number of high-tech and high-end financial fields, bring low-wage and lack of security to ordinary employees. It is hoped that robots and artificial intelligence will improve productivity, but these cannot solve the problem of insufficient social effective demand caused by unemployment. After discussions by Nobel economist Mike Spence and other experts, developed countries have reorganized their manufacturing industries and gradually formed a consensus on thinking.

However, Japan and the United States and other developed countries have re-emphasized the manufacturing industry, and even moved some production lines back to the mainland. This does not mean the reversal of globalization, but that countries are regrouping and preparing for re-globalization.

Faced with this new situation, China's manufacturing industry is a little confused. A few decades ago, China's manufacturing industry produced low-value-added consumer goods, which rarely competed with the manufacturing industries of the United States, Europe, and Japan. Today, the division of labor is not obvious. Where is China's competitiveness?

From an objective point of view, some parts of China's manufacturing industry still have no real competitors. The factors for the success of the foundry, in addition to the price advantage, the coordination of the operation of each component, the fast, flexible and reliable delivery, etc., are still beyond the reach of competitors in the short term.

Last summer Forbes magazine reported: "Why can't Amazon make kindle e-readers in the US?" The answer to that article was that, due to years of research and development of electronic products and laptops, Chinese-made circuit connectors, Controller boards, polymer lithium-ion batteries, etc., are still unable to replace the skillful connection and operation of assembling products such as Amazon's e-readers. Of course, there is also the price factor. The purpose of Amazon is to sell books for profit. The reader must be supplied to the market at a low price. After readers generally have this tool, they will buy e-books in large quantities. The readers produced by Chinese foundries can meet this requirement.

Amazon started as a bookseller and grew into an e-commerce retail behemoth. The business model is to keep costs down, there are no expensive storefronts and salaries for the sales staff who open the store every day, the inventory flows quickly, the customer pays with a credit card, and it only takes one day to get into the Amazon account, and they pay the publisher It is usually 90 days, so The greater the operating volume, the greater the cash flow in hand, even if the operating gross profit is zero, it still makes money.

For decades, many companies have followed this model, but Amazon is still standing and getting better and better, and customers are extremely loyal. to the customer? How to reduce personnel expenses in customer service in a self-service manner without reducing service levels? How to increase efficiency in every detail?

Practicing internal skills diligently and continuously improving efficiency are the basic strategies for defeating the wave after wave of external competitors. Effectively, the price can be lowered and lowered again, which is equivalent to exercising the lung capacity and holding your breath for a long time, making competitors lose the game due to "hypoxia".

Successful companies usually lay a solid foundation in the low-end market first, and then enter the high-end market. This is a classic case of corporate transformation in textbooks. It seems like an evolutionary theory. It must evolve from four limbs to two legs. If you walk, you will be at the low end, and if you don’t think about transformation, you will inevitably be replaced by cheaper competitors. It is unreasonable for enterprises to let the best and creative leaders to explore and innovate; however, in practice, an enterprise must rely on the cash flow brought by mature operations. While pursuing innovation, it can improve efficiency and maintain its low-end advantages. Good defense. China's manufacturing industry has long been called "the world's factory" by outsiders. In fact, it takes hard work to keep the throne of low profit. First of all, we must treat "small profits" positively and then we will try our best to defend the title.

Customer loyalty built up over a long period of time is a valuable asset: the quality of OEM products may be basically the same, once a customer establishes a dependence, there is inertia, and for the sake of high price comparison, Regardless of image issues such as whether the website design is fashionable or not, as long as the majority of the customer base is retained, the impact on manufacturing lung capacity will be limited.

Now that the economic climate of the United States and some Eurozones is warming up, there is no inevitability of accelerating the transfer of manufacturing to countries with low labor costs. Be confident, hold your breath, and exchange time to develop towards the high end of the value chain.

Japan's "exit and enter" is based on the original, retaining the success of the original model, and strengthening the elements of adapting to external changes. "Empty the cage and change the bird" is not feasible, otherwise it is like a saying in the West: when you pour the bath water, the doll is thrown out together.

Although experts like to talk about this revolution and that revolution, in my opinion, world trade is not at a truly revolutionary juncture. Countries have not denied globalization. The so-called re-globalization is a process and an adjustment of the rules of the game. , an example of which is an upgraded version of competitive neutrality, with rules to deal with strong state capitalism.

In order to achieve medium and long-term transformation goals, Chinese export enterprises must invest in R&D and product upgrading. At present, the profits of small and medium-sized foreign trade enterprises are meager, and it is impossible to reserve a large amount of research and development funds. The various new measures of the Abe government are worthy of careful observation and reference.

About the author: Zhou Naifing, visiting professor at the School of Communication Design, Sun Yat-Sen University, former senior financial reporter for Reuters. Author of "International Financial News Knowledge and Report".