AmCham: Market Shifting to Higher-End Manufacturing

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Jul. 29 – The American Chamber of Commerce in Shanghai has released the  first of its Viewpoint series focusing on the manufacturing industry in China and how it is evolving to include higher-end manufacturing.

The issue reports how China will no longer remain a source of cheap labor and resources in the future. American companies wanting to invest will have to implement industry best practices if they want to take a foothold in the Chinese market in the long-term.

It also adds that regardless of when China’s economy recovers, it is clear that the manufacturing landscape for foreign-invested companies has already changed.

Chinese leaders have always focused on making the country a high-end manufacturer eventually by developing its own domestic industries with it the trend of  rising labor costs is only expected to continue, even with a slight dip in base salaries, and more so when the Chinese economy recovers completely.

Amcham’s  China Manufacturing Competitiveness (CMC) survey, polling 108 foreign-invested manufacturing firms, showed that one in two respondents posted a decline of more than 10 percent for 2008 compared to 2007.

Interestingly, it also points out the rising popularity of the strategy of duality. This is when companies produce goods that cater for both the local and global markets. Instead of just concentrating on one area of doing business in China, companies that practice duality can take advantage of the opportunities of local market access as well as cost savings gained from producing goods in China for the international market.

A copy of the issue can be downloaded here.