Depth | Where is the sense of security of "World Factory"?
Recently, major multinational companies are facing external questions: Will they move the industrial supply chain out of China?
At the official level in the United States and Japan, the position has been constant for a while: they proposed to evacuate manufacturing companies in China, return to the local area or relocate to other countries, and also claimed that they would bear all the "moving expenses".
Will major multinational companies move industrial supply chains out of China, will it bring new external risks?
Is the threat of supply chain migration?
Economic behavior should not be over-interpreted
In fact, the discussion about moving the industrial supply chain out of China is not a "special product" of the epidemic.
As early as last year when the Sino-US trade war was deadlocked, some manufacturers began to consider moving their factories in China to countries and regions with lower export tariffs.
The transfer of the industrial chain not only stimulates the teachers, but also hurts the people. At a hearing on the imposition of tariffs on China held by the US Trade Representative Office in June last year, representatives of US companies agreed that the cost and price of transferring the industrial supply chain out of China is very high and unrealistic.
According to a report by Goldman Sachs, an investment bank, it takes 3 to 6 months to establish a new site, and 18 months to build a plant and put it into production. Arrangement of raw material procurement, logistics, production, improve workers' skills and cultural blending, which means The complete relocation will take at least two years. Guotai Junan's research report pointed out that based on the experience of Japan and South Korea, the general industry relocation takes about 10 years.
On the other hand, the World Economic Forum (WEF) report pointed out that the construction of industrial supply chains cannot be accomplished overnight. Multinational companies need considerable time and effort to qualify potential suppliers in terms of manufacturing quality, capacity, delivery, cost, and ability to respond to changes in demand. Therefore, once the industrial supply chain is established, it is difficult to adjust quickly.
Overall, it takes time to build an industrial supply chain, so at least in the short term, multinational companies cannot move the industrial supply chain out of China. However, in the face of psychological discomfort, some scholars pointed out that the migration of the industrial supply chain should not be excessively interpreted.
According to Rui Mingjie, director of the Department of Industrial Economics at the School of Management of Fudan University, the global distribution and safety of the industrial supply chain are economic and commercial issues. Multinational companies want to maximize profits, of course, they must find the most efficient and safest industrial suppliers and arrange Own industrial supply chain. Not only foreign companies will consider this issue, Chinese companies will also consider this issue, because this is a reasonable corporate economic behavior.
Rui Mingjie further pointed out that the global transfer of the industrial supply chain is the economic behavior of enterprises driven by commercial interests. These behaviors will be affected by the government policies of some countries under certain conditions, rather than individual words. Even if those governments have introduced direct policies, companies may not necessarily change their own industrial supply chains, because the cost of migrating efficient supply chain changes is extremely large, and it takes a relatively long time.
In fact, compared with the new crown epidemic, the pressure from tariffs is more likely to encourage the idea of multinational companies moving their supply chains out of China.
A business owner doing furniture export business in Zhejiang told China News Service that the cost of Vietnamese suppliers is actually 5% higher than that of the factory based on feedback from foreign customers. The offsetting effect of the additional tariffs makes it clear that, perhaps, suppliers who choose Vietnam may have lower procurement costs for these customers.
The status of "World Factory" is still difficult to shake
But where is the sense of security made in China?
The starting point for multinational companies in the deployment of industrial supply chains is economic benefits and production safety. Whether China can be of great appeal in these two areas is of utmost importance.
On the one hand, China is the only country in the world that currently owns all industrial categories in the UN industry classification, with 39 industrial categories, 191 intermediate categories, and 525 subcategories; Chinese manufacturing accounts for more than 25% of global manufacturing output The output ranks first in the world in more than 220 categories of 500 major industrial products in the world.
On the other hand, the cost of manufacturing in China is low but the craft is superb. The famous financial writer Wu Xiaobo pointed out that one of China ’s core competitiveness in the global manufacturing value chain is low- and mid-range engineers, technicians and skilled industrial workers in the fields of automobiles, medicine, electronics, machinery, etc. They are professional and disciplined Strong sex, which is also a major advantage that Vietnam and India cannot replace in the short term.
However, many trade experts point out that as China's manufacturing advantage in labor and cost is declining, China's domestic value-added industry-intensive labor-intensive industries (such as textiles, furniture manufacturing, electronic equipment, computers, etc.) shift the industrial supply chain The pressure is still great.
On the one hand, the engineer bonus made in China is difficult to maintain for a long time. The founder of Fuyao Glass Group admitted in the documentary "American Factory" that many positions in the manufacturing industry will eventually be replaced by machines, and this process will be very fast; on the other hand, the increase in labor, corporate land, and rent prices in China has made The production and operating costs of manufacturing companies are increasing.
In addition, China's huge consumer market may be difficult to anchor-in 2012, Adidas closed the only factory directly under China and moved to Southeast Asia; in 2016, Philips announced that it would stop operating the Shenzhen factory; in 2019, Samsung closed China The last mobile phone factory in China, but this does not prevent the products of these multinational companies from continuing to be sold to China. It can be seen that although the nearby production is more economical for multinational companies, it is not a necessary option.
So in the face of the threat of the migration of the industrial chain, where should the confidence of Made in China fall? In this regard, some people in the industry believe that China must consolidate its irreplaceable comprehensive cost advantage in the future. Although some labor and land advantages are being lost, high-efficiency output and perfect industrial supporting capabilities are still lethal.
For example, Tan Rongxi, chairman of the China Electronics Distributors Association (CEDA), said that China, as a major electronic product manufacturing country, has crossed the stage of relying on absolute cost advantage, and the world is more dependent on China for comparative advantage, that is, China has established perfect supply Chain ecological environment.
Will experience all kinds of pain
But it is also a driving force for transformation and upgrading
In fact, from the perspective of the characteristics and changing trends of the global industrial structure, the transfer of international manufacturing centers is an objective law of economic development.
Yang Lin, chairman of Xianghai Electronics, said that from the perspective of the global manufacturing industry's development trajectory, following the trend of "U.S., Japan, South Korea-China Taiwan-Mainland China", Southeast Asia is currently rising rapidly, and global manufacturing may also turn to Africa in the future. Global integration and the inevitable result of a high division of industry, so there is no need to be overly pessimistic.
In this general trend, China continues to optimize the business environment, promote global cooperation and innovation, and improve the company's own international competitiveness. It is the best response that is silent.
First, consolidate the defensive position of the demographic dividend of skilled workers. Rui Mingjie, director of the Department of Industrial Economics at the School of Management, Fudan University, pointed out that the increase in automation and intelligence has increased the cost of equipment input. Although the requirement for the number of labor force is reduced, there is a higher requirement for the quality of labor force. At this time, the number of labor force When the requirements change to quality requirements, the quality of the labor force is not good and there will be problems in the industry supply chain, so the status of the labor force is always an important factor.
Second, form an offensive of continuous industrial upgrading. At present, Made in China is more of a distribution center for production and processing, and its technological content is not high. In response, Zhou Weifu, an executive researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences, proposed that China should use 5G, cloud computing, Internet of Things, big data, artificial intelligence and other new technologies to form new manufacturing methods, including digital design, digital technology, digital processing, and digitalization. Assembly, digital management, etc.
Huo Jianguo, vice chairman of the China World Trade Organization Research Association, summarized this way:
First, the global manufacturing center must be supplemented by a huge industrial system and a strong global trading network, with obvious advantages in factors and technological innovation;
Second, as a global manufacturing center, the country must have sufficient domestic market demand support and an open market environment;
Third, the shift of global manufacturing centers is an objective trend. No country or individual can change the inherent laws of this economic development, and can only work to extend or limit some core areas to a limited extent.
Author: Mei Yawen