China relies on sophisticated and high-tech production. The Chinese authorities are no longer interested in the country being the supplier of consumer goods for the whole world. Many harmful industries are transferred to neighboring countries such as Vietnam, Indonesia, Cambodia, Bangladesh, which offer cheaper prices.
Despite the outlined trend of the emergence of new world centers of cheap production, there will not be a mass exodus of companies from China in the near future. Why are there almost no alternatives to China at this stage?
Developed industrial infrastructure. You can find everything from manufacturers of socks to sophisticated high-tech equipment. Convenient zoning of production allows to reduce a lot of time and choose the best supplier. There are entire cities specializing in the production of a specific product. Thus, most of the hosiery products around the world are produced in the village of Datang (Zhejiang Province), also known as the “City of Socks”. Sunxia (Zhejiang Province) is concentrated on the production of umbrellas, and Jingjiang (Fujian province) – on zippers. This is not offered to you by any country from the so-called “Mighty Five” group of countries (MITI-V: Malaysia, India, Vietnam, Thailand, Vietnam), which is identified as a cheap alternative to China.
30-year experience of international trade and business. China has been open to the world for over 30 years, many Chinese manufacturers have learned to understand the requirements of foreign customers well. It’s not just about English-speaking managers in factories and factories, but also about the business culture in general, which in China, to put it mildly, is different. And now when working with the Chinese there are many misunderstandings and difficulties, but the progress is huge. If earlier one could only dream of independent work with the Chinese, today many entrepreneurs without intermediaries successfully set up supply chains from China.
Technology and production efficiency. If some products of light industry can still be produced in other Asian countries, then in the field of technological production, there are practically no alternatives to China. There simply is no such equipment and technology. China has been the world leader in robotics for several years now. Qualified engineers and production automation in China enable us to produce a huge number of high-quality products in a short time.
Legal aspects. The Chinese government is well aware of the importance of exporting and attracting foreign investment, therefore, has been working for many years to protect the rights of foreign companies that produce their products in China.
Convenient and cheap logistics. In China, very clearly set internal logistics, which in a few days allows you to deliver cargo to sea ports, which are conveniently located along the eastern and southern coasts of China. The work of the ports is also debugged for decades. A large flow of goods provides attractive prices for the transportation of goods and the absence of any delays.
Acceptable prices. Despite the rapid rise in the cost of Chinese labor, it is still several times cheaper than in developed countries. In terms of price-quality ratio, China is the unconditional leader in the world. Talking about low prices for production in Bangladesh, Myanmar and other countries, do not forget about the cost of infrastructure, which you need to create there from almost zero. And also about the numerous risks that are inevitable in countries with only a nascent production.
Briefly summarizing: China has long attracted no one to exceptionally cheap production, and only the giants like Nike and H & M can afford to move their factories and plants to neighboring undeveloped countries. These companies invest huge amounts of money for debugging all processes, building expensive infrastructure and a multilevel quality control system. Because of these difficulties, not all companies who can even afford it, are in a hurry to change China to its neighbors.
There is no doubt that the leaders of cheap mass production will be the countries of MITI-V, but this will happen not earlier than in 20 years. That is why they lag behind China in this sphere, so there are no worthy alternatives yet.