China has been known as the workforce of the world in mass-production at the lowest cost possible. \u00a0However labeling products with \u2018Made In China\u2019 is increasingly becoming more and more expensive. \u00a0The cost of labor is increasing, with Chinese workers demanding higher pay and better conditions within the framework of the country\u2019s economic success.
\nThis in turn, has manufacturers taking on a \u2018\u2018China plus one\u2019\u2019 approach, where they produce in a variety of cheaper Asian countries, including Vietnam, Thailand and India. \u00a0Companies are now seeing that China is more expensive in comparison to other countries when producing large amounts of clothes, shoes, car parts and electronics, and therefore are attempting to diversify where they produce mass quantities of cheap products.
\nHowever not all companies are leaving China, since moving such a big factory is no simple feat. Nike, Ford and Intel have chosen to stay. \u00a0But many are becoming less dependent on China. \u00a0And not only for clear cut costs of labor reasons, but diversifying their factories could also reduce their political and geographic risks, ranging from a wide variety of factors, including taxes, governmental changes and natural disasters.
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\nAnd even though this appears to be harmful for China\u2019s economic growth, experts believe that this transition is part of a healthy, needed change in the country\u2019s manufacturing sector. \u00a0They argue that it helps China move towards a more sophisticated manufacturing, with higher quality products, as well as to develop a stronger workforce.
\nDaniel Trefler, a professor of business economics at the University of Toronto says that China\u2019s economic policy has been taken over by manufacturing, and needs to change in order to them to open up their economy to the rest of the world, and thus become the world\u2019s largest economy. \u00a0Today it is in second place, following the United States in first place. \u00a0He believes that change in China\u2019s economy will force a stray away from being low-wage competitors, and will become a more innovation-based economy.
\nTaneli Ruda, senior vice president and managing direction of Thomson Reuters OneSource describes China\u2019s manufacturing shift as a natural transition for a growing economy, and notes that Japan and South Korea also had similar changes occur in the economies, although at smaller levels.
\nRuda also notes how the \u2018\u2019Made in India\u2019\u2019 campaign is being pushed by Indian Prime Minister Narenda Modi, in the hopes of boosting their manufacturing base. General Motors has committed to doubling its presence in India, with a $1 billion investment to have Chevrolet vehicles in the country, calling it the \u2018Make in India\u2019 government program. \u00a0GM believes their market for passenger vehicles in India will grow to approximately eight million units in the next decade.
\nThe GM International Operations and GM China vice-president Phil Kienle says that they plan to be part of the growth, saying that the goal of the India investment is to double its market, and make India an export hub. They see this opportunity as one that cannot be passed up, for both the domestic market and for export markets.
\nIn 2013, GM split into GM China and GM International, claiming that this was done to be able to focus more in on Middle Eastern markets, in countries such as Africa, India, Southeast Asia, Korea and Australia. \u00a0\u00a0\u00a0GM says that it\u2019s strategy is to invest $5 billion to develop a family vehicle to meet the new needs of customers.
\nKienle says that GM\u2019s investment continues to perform strongly in Chinam but as they aim to take the company\u2019s growth a step further, they need to invest in other growing markets such as India.
\nThe diversification to other Asian nations also creates huge opportunities for countries such as Vietnam, Malaysia, Indonesia and India, which they have been trying to obtain through tax incentives for business to stray away from China.
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\nHowever it is important to keep in mind that China is not simply watching these changes happen, even if they are occurring for their best interests. China has established its own \u2018\u2019New Silk Road strategy\u2019\u2019. This set of trade and infrastructure agreements has the goal to foster free trade with its neighbouring countries. China is also attempting to shift the manufacturing focus to lower cost regions of the country, which have not experienced the same amount of economic growth as the higher cost coastal region. \u00a0Furthermore, they are trying to train their people to be a stronger workforce, in order to offer companies higher skilled workers.
\nCompanies continue to do business in China and still view it as beneficial. Many companies are teaming up with Chinese companies to aid them in selling in the local market. \u00a0In additional, with more and more Chinese middle class, this also means more clientele for companies selling locally.
\nSo all things being said, it is not the ultimate end of the label \u2018Made In China\u2019. However it definitely is slowly becoming less dominant, and for the best. \u00a0Other labels might start becoming the new norm on your cheap products.
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China has been known as the workforce of the world in mass-production at the lowest cost possible. \u00a0However labeling products with \u2018Made In China\u2019 is increasingly becoming more and more expensive. \u00a0The cost of labor is increasing, with Chinese workers demanding higher pay and better conditions within the framework of the country\u2019s economic success. This […]<\/p>\n","protected":false},"author":66,"featured_media":5894,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[],"class_list":["post-5891","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global"],"yoast_head":"\n