4.8d Why did some MNEs move certain portion of their companies’ operations/manufacturing site from China to other places? (Expert Sharing by Dr Edward Tse, Founder & CEO of Gao Feng Advisory Company)

Is a good question, but I think your point is only partially correct.

It's not entirely correct.

By definition, a lot of the labor-intensive manufacturing or

low technology content common range manufacturing which has

been a major pillar of China's manufacturing since the early

90s to early part 2000s because of increase in labor

cost in the process, China has become not very competitive.

And therefore, for companies or foreign or local companies, for that matter,

whose business is very much into this kind of labor intensive kind of manufacturing.

Many of them have taken the so-called manufacturing outside of China and

this is true for categories like shoes, textile, toys, and so on, right?

So that's true.

At the same time, China's manufacturing

actually is migrating upwards in terms of technology.

A lot of technology related manufacturing is still very much within China and

in fact, it's growing very very fast.

A key reason is because over a long period of time, you know,

China has developed clusters of supply systems, so

clusters of supply chains.

A lot of suppliers, they cluster around certain geographical regions to supply for

key manufacturers who are manufacturing technology sophisticated products.

And so, as you know, for example,

the Apple iPhone, that is almost all manufactured in China.

It's not gone outside of China, even though labor costs have gone up.

So I think your notion, your assumption,

that a lot of manufacturing have left China is actually only partially correct.

It's not entirely correct.

In my view, China is undergoing a major change in manufacturing.

It's going from a less sophisticated,

labor intensive, simple manufacturing into more technology related,

more sophisticated, and higher end manufacturing that will require,

not only even more stronger clustering of suppliers,

but also the notion of so called Internet Plus.

So-called Made In China 2025, and also the notion of Industry 4.0.

And, as you know,

China has now become the world's largest industrial automation market.

In less than 10 years, China has gone from nowhere to now the largest

Robotics markets in the world, and that will continue to grow because

as China's manufacturing continues to be upgraded, the need for automation,

the need for more technological sophistication in manufacturing,

the need to have even more man and machine interfaces will appear in China and

China will take on the challenges.

And in my view it would lead the world in terms of this kind of upgrading

of manufacturing capabilities.

4.8d Why did some MNEs move certain portion of their companies’ operations/manufacturing site from China to other places? (Expert Sharing by Dr Edward Tse, Founder & CEO of Gao Feng Advisory Company)

China Strategy

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