At the beginning of March, during the discussions of the two sessions of the National People's Congress and the People's Political Consultative Conference, the "China Manufacturing Competitiveness Research 2007-2008" jointly conducted by Booz Allen Hamilton and The American Chamber of Commerce Shanghai pointed out that China has always been The importance of purely low-cost and export-oriented production bases will gradually diminish. Of the 66 foreign-invested companies that accepted the survey, more than half believed that China is losing its competitive advantage over other "low-cost" countries such as Vietnam and India. "The era of Chinese manufacturing is coming to an end," said Hornbey, chairman of the Shanghai Manufacturing Industry Committee of the American Chamber of Commerce. "You can't just think of it as a manufacturing workshop."
The decline of the competitiveness
The main starting point for the joint research conducted by Booz Allen Consulting and the American Chamber of Commerce in Shanghai is to explore how US manufacturing companies should maintain their competitiveness under the environmental factors such as rising costs and intensifying competition in China. Dr. Xie Zuyi, President of Booz Allen Greater China, said in an exclusive interview with the newspaper that the purpose of the study was to analyze the perspectives of these manufacturing companies on China as its sales market and export platform, as well as on the corporate structure and how to manage operations in China. Provide corresponding suggestions.
The survey shows that 54% of the respondents believe that China is losing its competitiveness against other low-cost countries. The reason is mainly due to rising costs caused by RMB appreciation and rising wage costs. 70% of the respondents believe that the main reason for the decline in competitiveness is the appreciation of the renminbi, while 52% of companies point to rising wage costs. The salaries of white-collar managers and blue-collar workers rose by 9.1% and 7.6% respectively. Thirty-three percent of companies surveyed believe that another cause of China’s loss of competitiveness is the loss of employees.
And Dr. Xie Zuyi also pointed out that the labor contract law formally implemented in January 2008 will further increase labor costs. This has formed consensus in the industry. Therefore, there is reason to believe that in 2008, the rising cost of manufacturing labor will not be eased.
As a result, nearly 20% of the surveyed companies indicated that they have a clear plan to transfer part of their operations from China to other countries. Of the companies that showed an intention to transfer their operations, 88% of companies indicated that they had chosen China because of cheap wage costs, but today's lower wage costs and tax incentives in other countries make China's attractiveness increasingly threatening; 63% Companies intending to relocate from China use Vietnam as the best alternative to China; 37% of companies prefer India.
Operational optimization management also becomes a hindrance
The "China Manufacturing Competitiveness Study 2007-2008" also pointed out that while costs are rising, China still lags behind international standards in many aspects of its operations, especially in the areas of logistics infrastructure, trade environment, technology availability, management capabilities, and intellectual property rights. The protection aspect. In addition, the failure of multinational companies to achieve operational optimization in China and the failure to fully use China as their development market and manufacturing and procurement operations center are also important factors limiting profit growth.
The study found that three-quarters of companies lacked best practices in their operations in China. The interviewed companies believe that there are many best practices in China that have not been fully applied. Only 11% of the companies have applied planning and integration systems, such as Enterprise Resource Planning (ERP) software and Material Requirements Planning (MRP). . Only 7% of the total use of inventory analysis calculation tools and processes, and 4% of companies apply best practices in supply chain risk management.
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