It is no secret that labor costs in China have been rising at an intimidating rate over the last several years, but China still holds power as the manufacturing powerhouse of Asia. Chinese manufacturing is responsible for around one-quarter of total global manufacturing, and this gives it a few unique advantages. China’s dominance in manufacturing is hard to overstate, around ninety percent of all personal computers are produced in China, in addition to seventy percent of all mobile phones. This dominance extends into many different manufacturing niches, with China simply being able to outproduce the competition.
One area that China has been pioneering new and innovative ways to increase efficiency in is automation. Using robots certainly speeds up lead times in addition to cutting down on labor costs. In certain ways rising labor costs can be beneficial to companies, as China has given large incentives for companies to move to undeveloped areas where labor is much cheaper, in some cases up to 30% cheaper. Companies are almost guaranteed to profit from these fledgling areas, of which there are many. With so much development still to be done in China, there are many opportunities for companies to open and grow.
China also has a stark advantage over other countries when it comes to technological knowledge. China has the pedigree of being the World’s principal manufacturer, with ample experience in tailoring high-quality products to the requirements of the consumer. Other countries are unable to match the quality of Chinese manufacturers as they lack the knowledge and experience that is present in Chinese manufacturing. Chinese supply chains are also often very efficient and vertically integrated, many companies obtain raw materials at prices that are exceedingly economical. All of these factors provide further evidence that China is and will continue to be the manufacturing hub of the world.