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Is "Made in China" still advantageous?
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09:05, October 14, 2008

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The output of China-made products has topped the world's list over a long period of time. But with relatively low added-value, particularly the low proportion in terms of intellectual property rights, the comparative advantage of "Made in China" can only be found in the aspect of low cost. However the factors such as the continuous increase of cost in China's manufacturing industry and the appreciation of RMB have led "Made in China" into an era of high cost. Does "Made in China" still have advantage in that case? And if so where does the advantage lie ?

Maintaining the comparative advantage

The United Nations Industrial Development Organisation (UNDIO) estimated that a total of 172 kinds of Chinese manufacturing products were high on the world lists in 2007. Specifically, 70 percent of toy, 50 percent of telephone, over one third of coloured TV as well as suitcases and bags were made in China. The added-value of China's manufacturing industry accounted for 11.44 percent of world's total.

Zhu Hongren , director of Monitoring and Coordination Bureau under Ministry of Industry and Information Technology (MIIT) noted that China's manufacturing industry didn't lose the comparative advantage and would maintain the status quo for the years to come in spite of the soaring cost.

"First, China is competitive in terms of comprehensive ability to provide the auxiliary items. After years of development, China's manufacturing industry has formed a system which is complete in range and great in ability to coordinate between upstream and downstream industries, and could meet the market demand of various levels both from home and abroad. Manufacturing in China is still strong in consideration to the comprehensive cost. Additionally, the space of gradient transfer for home manufacturing industry is huge. Some manufacturers in coastal regions have enjoyed low cost through industrial transfer into the mid and west regions. Meanwhile, China is rich in labour, which shows the sign of growth in recent years, but it is still rather poor if compared with that in the developed countries," Zhu said.

Taking measures against the rising cost

Chinese government is actively pushing forward the drive of restructuring and optimising its industrial system in light of hiking cost. At the same time, China is also promoting the integration of manufacturing and information, manufacturing and service, accelerating self innovation as well as heightening the international competitiveness of "Made in China".

MIIT will take a four-step measure to facilitate the transition from "Made in China" to "Created in China": namely, improve and implement the policies for fostering self innovation, bring into the full play the technical innovation of the enterprises, and encourage enterprises to invest more for research and development; give more favourite policies to the self-innovation products through government purchase; initiate the brand strategy and create the advantage of differentiation competition in order to develop more well-known brands with own intellectual property rights; help the technical innovation of small-and-medium-sized enterprises and improve the construction of a soft environment for enterprise incubation and service system.

Helping reduce the level of global inflation

Zhu noted that there are many reasons behind the price hike of global primary products and the increase of global inflation rate. However, the integration of "Made in China" into the global economy helps reduced the level of global inflation.

China has greatly undertaken the global industrial shift since the 1990s, and has been the favourite choice in foreign investment among all the developing countries. In recent years, Chinese government has put more effort on industrial restructuring, explored the alternative mode for development, curbed the high growth of energy-intensive and high-emission enterprise, put an end to the backwardness of some industries and address more on energy saving and emission reduction as well as sustainable development.

A considerate amount of Chinese exports are manufactured in foreign-funded companies and resell to China. Such trade mode currently accounts for some 50 percent of China's two-way trade, which is believed to be a result of global industrial division.

"The developed countries imported huge amount of high-quality and cheap products, which on one hand improved the welfare for their people, on the other hand, curbed the global inflation," noted Zhu.

By People's Daily Online

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