China Manufacturing Power

China is the largest manufacturer, often referred to as 'the factory of the world'. It has been an attractive destination for manufacturing in recent decades due to its lower labour costs, technically well-trained workers and a solid infrastructure. However, China's manufacturing landscape is changing, with more developed regions ascending the value chain, and manufacturing that is labour-intensive moving to into the inland. Many companies are opting to produce in China to serve the expanding Chinese market, and not utilize it as a low-cost method to produce export-oriented items.

Manufacturing's percentage percent in Chinese GDP has been slipping in recent years, but it is still a significant sector, accounting for 42.6 percent of GDP in 2014. The industry employs approximately 30 percent of all workers in China and has made sure that China remains the world leader in terms of the gross value of industrial output. On the more developed Chinese east coast, the emphasis has shifted to modern manufacturing, whereas lower-cost and labor-intensive manufacturing is becoming more in the inland.

But, as China's emphasis on the services industry increases, more Chinese are expected to work in the financial service sector, rather than production or agriculture.

Advantages and challenges of manufacturing in China

The advantages of manufacturing in China include access to more advanced Chinese technology, research and development (R&D) as well as sciences and technologies, along with incentives provided by provincial, local as well as central governments. Another advantage to manufacturing China are the efficiency gains from the increased economy of scale in China. However, rising costs for labour, skills shortages in addition to intellectual protection issues are major aspects to consider when looking at making products in China.

Other issues and concerns with manufacturing within China are the current stage of development, inconsistency with application of commercial law in China and the variable quality of logistics and infrastructure systems. Utilizing subcontractors or contracted manufacturers can cause significant problems that have to be strictly managed. This includes the requirement for rigorous quality control and the risk of leakage of the product to the market in the country and internationally production delays, ethical and corporate socially responsible manufacturing.

What do you need to consider?

There are several ways for foreign companies to make their mark in China. Contract manufacturing is a common option for both large and small-sized businesses in a variety of sectors. Australian businesses can also choose to invest directly into a factory in China by investing in it as a foreign-owned company wholly owned or in an alliance with an Chinese company.

Location is another key consideration when it comes to making in China, with the Chinese Government encouraging investment in different types of manufacturing in various regions. In the more developed areas of the eastern seaboard, where salaries are higher and the infrastructure is superior The Government encourages investment.

In high-end, low-polluting production. Further inland, in China's central and western provinces in which labour costs are lower and infrastructure is less developed, the government encourages investment higher-labor-intensive manufacturing. Some provinces and cities are specialized in specific industries and produce particular goods.

Quality control is a key consideration when choosing to manufacture the products in China. There have been several high- prominent instances where poor quality control from Chinese manufacturers - usually sub-contractors have caused major problems for international brands, which range from toys to clothing and food products. Make sure that you have effective quality control systems that are in operation along with perform your due diligence.

About Author: Steven Cheng, the founder of Topworks Plastic Mold, a China injection molding company with the most complete services, from design to production. Topworks provides customers with a one-stop service for Polycarbonate injection molding and ABS injection molding. The company's professional team has excellent product knowledge of the plastics industry, which enables it to provide customers with quick responses and high-quality service.