Over the past four decades, the Chinese, through their hard work and ingenuity, have emerged as the world’s largest manufacturer and the only country in the world to have a full range of industries. At the same time, many goods made in China are now uniquely irreplaceable in the global marketplace, and this is something that many people and institutions around the world, including American consumers, American businesses, corporations, and Indian consumers, have a lot to say.
In a new development, Goldman Sachs recently released a new report stating that most U.S. companies in the semiconductor equipment and materials and healthcare sectors are actually expanding production in China. Goldman Sachs says that China’s overall strength in manufacturing is intact. Meanwhile, Tesla, the world’s most valuable car company, plans to export Model 3 cars made in China to other Asian markets and Europe. Tesla CEO Elon Musk said “Chinese suppliers are extremely competitive, probably the most competitive in the world.”
Musk said, “The Shanghai plant is big …… plays an increasingly large role.” What’s really beneficial, he said, is that it has increased local sourcing of components, which “has had a huge impact on vehicle costs.” This is in line with the Goldman Sachs report on China’s manufacturing industry has “a large domestic market, complete industrial supply chain and good infrastructure most attractive to foreign manufacturing investment” this view.
Then look at U.S. businesses, things are a new development, Reuters reported two weeks ago, many U.S. retailers do not want to suffer from the possible rebound of the epidemic out of stock suffering, are stepping up imports to stock up for Christmas. For example, one U.S. board game maker has ordered an extra 1 million sets of cards from its factory in China, lest the new epidemic ruin the company’s Christmas sales. The company’s chief operating officer, Carly McGinnis, said that over the past few months, “I’ve started buying from China as soon as I can.
Not only that, but Magnus, the head of the U.S. Customs Brokers and Forwarders Association, found a few weeks ago that warehouses across the U.S. were in record condition, and that behind this phenomenon were more than 250,000 U.S. warehouses that were significantly stocked with a wide variety of Chinese-made goods. This included microwave ovens, vacuum cleaner filters, swimwear, furniture and more, with some of the stockpiled goods piled to ceiling height in warehouses.
And among American consumers, there’s a growing chorus of voices that can’t be separated from Chinese-made goods. Asian-American Guo Hong said a few months ago that almost all stationery in children’s school bags, pins, glue, stickers …… without exception. And at a hearing in the United States a few weeks ago, an American consumer was asked by a reporter, “Can the products you need be made in other countries?” A: “No, only China has the complete production chain.” “Are there any other substitutes for this Chinese product you are importing?” A: “No. American consumers just love this Chinese product.”
Then look at the Indian market, since September, India, a number of large export-oriented textile enterprises because of the epidemic can not guarantee normal delivery, European and American retailers in order to ensure that the supply is not impacted, will be more than originally produced in India to transfer the orders to China production. For example, from India to China’s orders, towels, bed sheets and other products, a larger volume of orders, some received in India “back” orders of the factory is expected, now the number of orders has been arranged to May 2021. In other words, India’s manufacturing orders are moving to China.
For example, a company in Zhejiang Jinhua in June this year suddenly received a previous should have been produced in India, Spain ZARA long-term orders for hundreds of thousands of tablecloths. Another example, a Hebei company received an order for two million towels from India, twice as many as in the same period last year. And this is just a snapshot of the Indian economy’s inability to cope with the pandemic, the lack of manufacturing capacity and the need for global companies to shift production to Chinese companies. Already, many Chinese textile companies have orders lined up until May of next year. In the chart below, we can clearly see the trend of growing textile exports from China.
This further supports the notion that India’s manufacturing capacity is lacking, as well as limited production levels. The Financial Times Asia Editor-in-Chief Pirin earlier analyzed that manufacturing in India can hardly be in gauge India does not have a good reputation in manufacturing. Even the Indians themselves also despise their own products, India made the so-called “patchwork innovation” is the product of material scarcity – India put together the parts with tape, paint and prayers, India made the name loud, but is like “A mirage.”
Still taking the Indian textile industry as an example, in the month of June this year alone, a factory of Gokaldas Exports, India’s largest garment manufacturer and exporter, announced the layoff of 1,200 workers. The Clothing Manufacturers Association of India (CMAI) predicts that, pessimistically, India’s entire textile industry could lay off 10 million workers.
And at the Indian consumer level, Chinese manufacturing is even more irreplaceable. For example, The Hindu has reported that during major Hindu festivals (“festival of lighting”), almost all of the products such as lamps, incense, fireworks, idols and other related products sold in the market are made in China. And the Hindustan Times earlier cited a survey report showing that 83 percent of the 8,973 Indian consumers surveyed said that there was no substitute for the dual advantages of Chinese products in terms of price and quality.
It is evident through multiple aspects of the US and Indian markets that the capabilities of Chinese manufacturing are being further validated and many goods and areas of Chinese manufacturing are showing irreplaceable qualities. What’s more, in recent years, it has become a fact that Made in Germany, Made in Japan and Made in Korea have been replaced in many aspects.
For example, Made in Japan has been heavily criticized in recent years due to scandals such as counterfeiting. A new development is that, according to the latest media reports, recently the well-known Japanese dairy brand Snow Seal Dairy Co. It is reported that the recall is of liquid milk produced by Snow Seal’s subsidiary for infants aged 0-12 months, with a shelf life until September 16 next year, because “small pieces of metal can packaging may be mixed in, which may pose a safety risk to infants. As you can see below, some analysts believe that Japanese manufacturing is falling from grace in many ways.
Meanwhile, in the Asian market, Reuters reported in an analysis three years ago that South Korean manufacturing is being eaten by the rising Chinese manufacturing whale. South Korea’s semiconductor, shipping, shipbuilding and automotive sectors are also being caught up by Chinese companies, the media said. And in Europe, German television reported a few weeks ago that German manufacturing is lagging behind China in many areas such as electric vehicles, artificial intelligence, high-speed rail, and 5G technology …….” Professor Fletcher, director of the German Institute for Economic Research, said in response that it’s time to update your knowledge, and that the German economic miracle is no longer a model.
So what about the manufacturing of Vietnam, which has been developing its manufacturing sector in recent years and trying to increase its manufacturing exports by dramatically increasing them, and what is happening now? A new development in the matter is that Vietnam is experiencing massive unemployment in its factories as orders from the US and other Western markets for Vietnam’s manufacturing sector have plummeted, resulting in weak light industrial products and a drop in export orders. The once hot Vietnamese economy may be falling victim to this, according to a Reuters analysis.
Data shows that Vietnam has only 55 million manufacturing workers, a far cry from the level of labor resources needed to produce a large number of manufactured goods. For example, Vietnam’s production of medical commodities of non-woven fabric is not self-sufficient, are heavily dependent on imports from Chinese enterprises. CNBC earlier quoted Bain & Company vice president Gerry Mattios said the global manufacturing plant facilities will become more decentralized. We don’t think Southeast Asia will become the world’s factory. In Southeast Asia, people tend to see only a few assembly lines, but not all of them.
In other words, Mattios believes that Vietnam in Southeast Asia is not likely to become the next factory of the world. Nguyen Chi Dung, Vietnam’s Minister of Planning and Investment, said a few weeks ago that if Vietnam does not catch the Industry 4.0 train, the real gap between Vietnam and other countries will grow wider.
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