The Future And The Past For China Manufacturing
Posted by Dan on April 5, 2008 at 06:08 AM
Joe Nocera of the New York Times just did an article, entitled, "Seeing the Sights of Industrial China: 2 Factories, 2 Futures," contrasting a textile factory with a manufacturer of silicon wafers for use in solar panels. The textile manufacturer is sinking fast due to the rising Yuan, rising labor costs, and China's policy of "moving up the value chain. This is in direct contrast to the silicon wafer manufacturer for whom these factors either do not much matter or are actually a plus.
I do not see China just deciding to "move up the value chain" and then getting there six months from now, but this article does on a micro level nicely describe what is happening in China manufacturing.
Comments
To be honest, I am a bit surprised by this article's weakness. NYT is a medium that I consider head and shoulders about many, and I hope they will take this as a lesson that parachuting reporters into China does not add value.
China is moving up the ladder in some areas, and it has been an ongoing process for a while.
Areas like Suzhou and Dalian are far ahead of Changsha and Nanchang in this process, but over time even those cities will take steps forward.
r
www.allroadsleadtochina.com
Posted by: Allroads | April 6, 2008 1:32 AM
Hi Dan,
I have to disagree with your statement about China not moving up the food chain - they are at the top of the food chain in the wireless sector.
If you had a chance to ever attend one of my presentations on China's wireless markets, you'd know that China's MII and various handset manufacturers developed advanced technologies for cell phone handsets and other mobile devices. They are also advancing from already developing their own 3G standard (TD-SCDMA) to a 4G standard called FuTURE Project. In fact, they have already tested 4G a year ago in Shanghai. Their strategy is to skip 3G as a stand alone and use their own 3G wireless over-the-air protocol interface and deploy it with a 4G technology down the road into dual mode handsets (to avoid licensing issues with Qualcomm). No one else is doing this now. The MII knew a while ago 3G as a stand-alone technology on a handset just isn't all that worthwile and 3G (beyond the hype) data plans do not sell well(not fast enough to keep up with today's video requirements).
Posted by: Karl Weaver | April 6, 2008 5:45 AM
As China moves upwards in the value Chain, the Yuan will raise accordingly.
Posted by: ecodelta | April 6, 2008 10:41 PM
Moving up the value chain means moving towards to products with higher technology content, to distribution and branding. These will naturally require sometime and experience. However, if you consider the flat world for information, the growing number of Chinese MBAs and international talents, China may leap over a couple of generations of business ideas and catch up head-on. One thing for sure, the learning process is not going to be as long as it takes for the West to be where we are.
Posted by: Tian | April 8, 2008 8:09 PM