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China's manufacturing sector faces cost challenges (2)

(People's Daily Online)

16:48, July 23, 2012

Experts said that foreign investors had swarmed into China since the 1980s and 90s as the demographic dividend, relatively cheap land, and other favorable factors made the country the top investment destination in the world.

However, as these favorable factors gradually disappear, investors are naturally turning their attention to certain emerging economies, which is in line with the nature of capital flows. The continuous influx of foreign capital will encourage these emerging economies to accelerate improving supply chain logistics and infrastructure, placing Chinese manufacturers under increasing competitive pressure.

“Under the guidance of the central government's macro-control policies, Chinese exporters will adhere to the path of technological innovation and upgrading,” Zheng said.

In fact, the structure of China's manufacturing sector has undergone quiet changes in recent years.

Many multinational corporations such as Siemens, Samsung, and Philips have set up research and development centers in Suzhou Industrial Park to design and develop new products catering to the needs of Chinese consumers.

Suzhou Industrial Park is the home to 46 headquarters projects and 117 foreign-funded research and development institutions.

The output value of emerging industries in the industrial park exceeded 200 billion yuan in 2011, accounting for over 53 percent of the total output value of the park.

Analysts noted that China's manufacturing sector must make full use of limited time to achieve industrial upgrading, adjust its structure to shift from low-cost competition to diversified competition, and make technological breakthroughs to improve products and production processes. By doing so, China will evolve from a “big manufacturing country” to a “strong manufacturing country.”

This is the right direction for China's manufacturing sector.

Read the Chinese version at: “中国制造”直面成本考验, Source: People's Daily, Author: Du Haitao

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