China’s status as the “world’s factory” is unshakable

China’s status as the “world’s factory” is unshakable “Nihon Keizai Shimbun” article on February 8, original title: China’s “world factory”…

China’s “world’s factory” status is unshakable “Nihon Keizai Shimbun” article on February 8, original title: China’s “world’s factory” status is unshakable As the scale of the economy expands, China’s influence is also growing. Global entrepreneurs seem to be unable to ignore China's existence. Evidence of "China's importance" can also be seen in recent corporate surveys by international accounting firms Deloitte and KPMG. Deloitte and the American Council on Competitiveness released the "Global Manufacturing Competitiveness Index" at the beginning of the year. The index is derived by inviting 552 operators from global companies around the world to evaluate the competitiveness of manufacturing infrastructure in various countries and regions. As a result, the number one position is still known as the world factory? China. What deserves more attention is the expectation five years from now. Some people believe that due to reasons such as rising labor costs and increased awareness of employee rights, China's prospects as an investment destination for the manufacturing industry are not optimistic. The results of this survey show that China will still maintain its No. 1 position in competitiveness in five years. The expected ranking after 5 years is interesting. The second place will be India (currently ranked 4th), and the third place will be Brazil (currently ranked 8th). The two countries will rank among the "top three," surpassing Germany, which currently ranks second, and the United States, which ranks third and continues to make a comeback in manufacturing thanks to the shale gas revolution. The strategic trend of global manufacturing companies in emerging economies centered on China cannot be changed. On the other hand, KPMG recently released investment trends in the automotive manufacturing industry. A survey was conducted among 200 automotive industry insiders from 31 countries on "Which country is their top priority as an investment destination?" and it was found that 70% of the respondents answered "China." The BRICS countries are all showing strong momentum. India is at 63%, Russia is at 54% and Brazil is at 48%. Dong Weilong, co-head of Deloitte China's manufacturing group, analyzed, "China's labor costs and corporate tax rates are relatively low. These factors are still attracting global companies." Taking wages as an example, according to statistics from the Japan External Trade Organization, the salary of an ordinary worker in Wuhan, an inland region of China, is US$333 per month. It is significantly lower than the United States, which is nearly 3,000 US dollars per month, and Japan, which is nearly 4,000 US dollars per month. Of course, China has set the goal of doubling residents' income by 2020, and the minimum wage determined by local governments is also rising year by year. At the same time, if we look at wages alone, there are still many areas with low wages such as India ($260 per month in Chennai), Vietnam ($111 in Hanoi), and Myanmar ($68 in Yangon). But global entrepreneurs are paying keen attention to China because China has a huge market. According to KPMG's forecast, by 2018, new car sales in BRICS countries will account for nearly half of the world's total. "Produce products in the sales market." According to this iron law of manufacturing, it is a natural judgment to strengthen investment in China. Japanese companies’ investment in China has not slowed down either. According to statistics from the Ministry of Commerce of China, Japan's direct investment in China (actual amount used) in 2012 was US$7.38 billion, ranking second among countries and regions, with a month-on-month growth of 16.3%. Compared with the 4.5% growth rate of U.S. investment in China, Japanese companies’ investment in China is still strong. However, what is worrying is the direction of Sino-Japanese relations. A Chinese lawyer who is familiar with the legal and labor issues of Japanese companies revealed, “In the past two to three years, inquiries about withdrawing from China have increased compared with inquiries about entering China.” “There are even small and medium-sized enterprises that are worried about the risk of anti-Japanese and have chosen to withdraw from China completely.” An executive of a large Japanese company based in Shanghai lamented, "Not long ago, the headquarters still regarded China as a key investment destination, but now it has changed to Southeast Asian countries such as Myanmar. Even if Chinese branches propose investment projects to the headquarters, they will be ignored under the current situation." Due to anti-Japanese risks and the slowdown in China's economic growth, it is natural for companies to adjust their investment strategies in China. But for Japanese companies, the fact that other overseas companies as competitors still regard China as a key investment destination cannot be ignored.