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Bloomberg Business Week – aside from increasing domestic consumption, there are two further megatrends developing in China over the next five years that senior executives need to keep in mind.
1. Increasing domestic consumption
2. Instead of moving to find work in manufacturing centers in southern China or such first-tier cities as Shanghai and Beijing, more young people are moving to second- and third-tier cities such as Wuhan, Hefei, and Shenyang, where they can find good white-collar jobs closer to home.
3. A further megatrend unfolding in China is the upgrading of quality and capabilities in Chinese factories. Many factory owners are looking at how to move away from simply being outsourcing manufacturers and toward building their own brands, just as Taiwanese computer vendors such as Acer and Asustek have done
As cheap labor becomes increasingly scarce and as fear of a Chinese yuan appreciation rises, Chinese factories are retooling to become more automated. Companies see that owning their own brands gives them better margins than mere manufacturing does. It also lets them sell to the fast-growing domestic market.
Chinese factories are improving oversight and quality control. Advances have been made to such an extent that even German companies renowned for demanding perfectionism are starting to relocate production of higher-end products to China, which partly explains why China last year replaced Germany as the world’s biggest exporter.
The key takeaway: If low-cost labor is a priority, companies need to look to other labor pools such as those in Vietnam and Bangladesh to manufacture low-end products. They also need to realize that old manufacturing partners in China might quickly start competing directly with them on brand image, not just price
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Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.