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Revamping "Made in China"

[dropcap type=”square”]L[/dropcap]ess than three decades ago, China produced about 3% of global goods; today, it is the world’s largest manufacturing nation, with its economic output accounting for nearly 25% of global GDP. Dubbed the “factory of the world,” China is now ready to take its next step, transforming its economic infrastructure from a manufacturer of mass quantity, to one of high quality.

History suggests that there is a standardized process for moving from low-cost to high-quality manufacturing. Both 19th century Europe and the early 20th century US graduated through similar cycles of modernization and increased efficiency. In the early 20th century, the US manufacturing industry was the backbone of the country’s economic growth. As labor and production costs rose over time, the vast majority of American companies transferred manufacturing functions offshore and focused on increasing product value and upgrading the quality of products and services.

In modern day China, a similar economic cycle is emerging. We are witnessing the end of low-quality, low-cost manufacturing in China; most companies are outsourcing these functions to cheaper Southeast Asian countries such as Laos, Cambodia and Vietnam. Nowadays, China is looking to compete on another level by refining its economy through shifting its focus to high-end manufacturing and becoming a global leader in high-tech, high-efficiency manufactured goods and services.

The China Transformation

This ambition is echoed in Chinese Premier Li Keqiang’s “Made in China 2025” initiative, released in early 2015. The 10-year plan is designed to transform the country from a manufacturing giant into a world manufacturing power by 2025. Premier Li said the strategy will be followed by another two plans in order to position China as a leading manufacturing power by 2049, the 100th anniversary of the founding of the People’s Republic of China.

China's Goals

Made in China 2025 to Promote Breakthroughs is 10 Key Sectors

Made in China 2025 to Promote Breakthroughs is 10 Key Sectors

It is worth noting some of the most promising industries amongst these 10 breakthrough sectors:

  • Medical Devices and Services

This industry is set for tremendous transformation. Currently, only 11% of China’s population is over 60 years old. However, by 2050, this number is expected to balloon to 33% of China’s population. This implies that more medical devices (and services) will need to be both replaced and upgraded to allow for efficient care of the nearly 500 million elderly people in China.

  • Information Technology
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China’s high-tech infrastructure is so new and exciting that it is allowing startup firms and global conglomerates alike to carve out unique benefits across the industry spectrum. One example is China’s mobile smartphone industry, which has rapidly grown in a short period of time. China’s smartphone ownership has leapt from around 200 million phones in 2011 to over 600 million by the end of 2015. Because of China’s population of 1.4 billion, this upward trend has monumental implications for this industry.

A Need for an Economic Adjustment

China’s bold flight-to-quality aspirations seem to be driven by several factors. Firstly, the country has wanted to shake the negative connotations of the “Made in China” tag. According to global brand agency FutureBrand, consumers value product origins more than product pricings, availabilities or styles. In light of this finding, China is keen to move away from low-value production towards higher value-added manufacturing.

But there are concerns that lie deeper than just issues related to the country’s poor-quality image. In 2014, China’s economy grew at just 7.4%, its slowest pace in 24 years. This reality, coupled with the country’s rising manufacturing costs, shrinking labor force and weaker global economic demand, has accentuated the need for an economic adjustment.

The “Made in China 2025” strategy seems to have been born out of those concerns as well as the necessity to keep the country growing, albeit at a slower, more sustainable rate. China’s central policymakers know that for it to accomplish these goals, it can’t continue churning out low-quality, low-cost consumer goods; it must climb up its own respective value chain and produce goods that appeal not only to global consumers, but to Chinese consumers as well.

The Chinese Dream

At the helm of China’s strategic realignment sits Xi Jinping, the country’s president. Since coming to power in March 2013, Xi has enacted the most rigorous anti-corruption campaign the country has seen in decades, allowing China to improve its image across the global market. It seems fitting that President Xi, who coined the phrase “Chinese Dream,” is the person most responsible for the “Made in China 2025” strategy. By focusing on innovation and technology, the strategy aims to bring greater prosperity and opportunity to the Chinese people—a crucial step toward reaching the Chinese Dream.

The people of the Middle Kingdom are realizing that the Chinese Dream is not a dream at all, but a real life metaphor for hard work, creativity and determination allowing for a brighter future.

As the Made in China 2025 campaign continues to be rolled out, the people of the Middle Kingdom are realizing that the Chinese Dream is not a dream at all, but a real-life metaphor for hard work, creativity and determination allowing for a brighter future. Some experts warn that China will be facing an uphill road and that the journey to the top is not going to be an easy one. A spokesperson from the Ministry of Industry and Information Technology (MITT) admitted as much, when he stated, “China is being pressured from both emerging markets and developed markets. Advanced economies such as the United States, Germany and Japan have all formulated policies supporting further development of their own manufacturing. At the same time, emerging economies such as India and Brazil are also catching up with their own advantages.”

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However, if all goes according to Xi’s plan, China will be in a position to lead the world in both high-tech manufacturing and cutting edge consumer products and services innovations. No longer will consumers turn up their noses and deem products with the “Made in China” tag as “junk that lasts a few weeks.” Instead they will see the quality, prestige, excellence and creativity born from China’s high-level manufacturing industry.

This article was published in the 2015 edition of HQ Magazine, a publication of CSOFT International. If you’re interested in learning more about CSOFT’s globalization and localization solutions, visit our Twitter, Facebook, or LinkedIn pages or you can visit our webpage.