China Has Always Been the Lead In Manufacturing , but What Is It That Makes China "top Dog"?

...

“China was certainly a large economy and often the largest economy on the earth, the lives of the majority of its people rarely rose above a level of subsistence”(1)

MacFarquhar, Roderick (1987). "The succession to Mao and the end of Maoism". In Roderick MacFarquhar. The Politics of China (2nd ed.). Cambridge University Press. p. 320. ISBN 9780521588638. Retrieved 2008-12-11.

The standard of living for the majority of the Chinese people was far below the standards expected. The cultural differences of the Chinese people meant that there were certain responsibilities that they had to uphold. The parents are expected to support their children through out further education and provide them with food and clothes until they are old enough to enter full time employment. In return, once the children become of full time working age, they need to return the money the parents once spent. The children are left providing their parents with enough money to ensure they have a comfortable life. This adds great pressures onto the work force of the Chinese people, as the labor force shrinks and the population ages, there aren’t as many workers to support those wishing to retire. The youth are finding there own opinions on the situation, many wanting to go and travel abroad to widen their horizons, the problem being that they are deciding not to return. America and Europe are two of the most appealing countries for students to go and study. The emphasis was also put on men in China having to provide for their wives, where they were expected to deliver a marital home. This is a common comparison to the UK in the 1940’s, suggesting that the Chinese civilization isn’t evolving as quick as competing countries.

As times are always changing and the wider world begins to see what is happening in other countries it isn’t so easy to maintain the government’s repressive attitude towards its workers. They were forced to introduce minimum wage legislation in 2008; meaning firms now are legally responsible for increasing wages. For many factories this came at a cost, they had to increase the product price appropriately in order to sustain their profit margins.

“China’s geographical size meant that there is a significant wage variation, meaning firms may choose to relocate within China itself.” (3)

http://www.ncbi.nlm.nih.gov/pubmed/12311440

Going across provinces to Jiangsu or Anhui meant that factories could continue producing with the reduced labor price. Many factories had begun to discover this information and open new developments in this area. However this was compromised by the increased price of shipping. China’s main shipping bay is Shanghai, and the newly located factories were much further west, meaning the transportation fees had to increase.

On average, to the remainder of the producing world, China still has one of the cheapest labor markets, they are still able to produce cheaper than competing countries such as; Japan, USA, Turkey and Israel. Figure 1.1 China’s surge in labor costs has not decreased their status. It is clear to see how companies are able to maintain the custom, as other countries are not able to compete with this.

“Hourly compensation costs of manufacturing employees in selected economies and regions, 2008”(6) [pic 3][pic 4]

(Figure 1.1)“Hourly compensation costs of manufacturing employees in selected economies and regions, 2008”

http://www.bls.gov/fls/china.htm#charts

After the Chinese revolution it is difficult to understand how they became a rapidly developed country in such as short space of time.

“China was established in 1949 (Globally) and became industrialized in 1960, before this parts of China were owned by Japan, Russia, and Germany. The pace has quickened since the world trade organization in 2001. Exports in 2003 saw a business increase of 34.6%”

www.Rieti.go.jp/en/china

China suddenly realized its potential. The government became aware of its power and impact on the people and its businesses. They made changes that would lure foreign trade to China, and appeal to its exporting markets. In order to reduce costs and bring in the customers China’s government gave a tax break to all companies that exported, meaning instantly companies were able to sell their products cheaper than many other surrounding markets such as Taiwan, Philippines and Singapore.

China wasn’t always able to participate in such a competitive market, they needed to understand their weaknesses and what was preventing them from emerging. One of the biggest problems was the lack of their own technology, brands and distribution channels in overseas markets. China’s experience lacked in comparison to countries such as Germany and Japan. Although the Chinese were fast learners and able to copy almost anything it wasn’t easy for them to develop products of their own.

1.4 Raw materials

One of the many advantages of producing in China is its vast availability of raw materials; China has the supplies such as; plastics, textiles and metals, however they lack key materials, such as; coal and oil.

In order for China to develop further, it needs to become self-sufficient, and in order to do this they need to acquire a contract for the constant supply of oil. China’s appetite for raw materials to feed its investments will add to the future constructional boom.

“The sole Chinese objective is the development of China, its self sufficiency and its economic and energy independence. It is not to help foreign companies even after the post Soviet transition.”

http://www.dani2989.com/matiere1/chineoilgb.htm

Currently China’s import rate is too high for it to be able to reduce its costs. Importing goods means longer lead times and a lack of control. China is becoming an instigator of an advanced plan, forecasting every move in order to win the game. China places its pawns in position for a long-term advance and is planning to checkmate.

The magnitude of China geographically, means that the country will always consume more energy then others, adding to this are the consumption of factories and other industrial plants. China is in need of a long-term solution to this problem and is currently looking into the expansion of its self-sufficiency by signing contracts with numerous countries to ensure its supply of fossil fuels.