China moves upmarket as it sheds its image for cheapness
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E-mail Xinhua, January 21, 2014
The “made-in-China” label is shedding its cheap image and reputation for low value-added goods as China takes over from the United States to become the top powerhouse in global trade.
Its factories are churning out ever more sophisticated products for people around the globe, according to the latest customs statistics.
Machinery, electrical and high-tech products continued to expand their share of total exports with growth rates outpacing those of other major items. Last year, such goods accounted for about 80 percent of total exports, contrary to perceptions that textiles, shoes and furniture make up the bulk of made-in-China goods.
Rising labor costs and yuan appreciation have propelled exporters to move up the production chain.
The upgrade accelerated amid a lukewarm global recovery. In 2013, China’s exports rose 7.9 percent to US$2.21 trillion.
Premier Li Keqiang has promoted advanced high-speed rail with Chinese-owned intellectual property during his foreign visits.
Employment trends underscore changes in industrial structure, according to Louis Kuijs, China economist of the Royal Bank of Scotland.
In 2012, people working in transportation, electronics, computers, communication, machinery and equipment industries outnumbered those in textiles, clothing and leather by about four million. In 2000, the latter industries employed almost twice as many workers than the former.
The domestic value-added component of exports is rising. The share of value added in exports rose from 63 percent in 2004 to 76 percent in 2012, Kuijs said.
China must rely on scientific and technological innovation to improve the overall quality of its economy and to move upward in the industrial value chain, Li said.
At the lower end of the value chain, China is losing its edge as surging wages and rising currency rates affect the prospects of low value-added goods.
“We paid junior workers 700 to 800 yuan per month in 2005. Now we have to give them more than 3,000 yuan,” said Lai Jushan, a senior manager of Hersun Plastics in Dongguan, Guangdong Province, China’s manufacturing hub.
Minimum wages have doubled since 2005 in Shenzhen, a metropolis bordering Hong Kong.
Adding to the across-board wage rises, the rising yuan has also eroded profit margins in China’s low-cost industries.
It has risen more than 36 percent since the currency’s revaluation in 2005, taking a toll on Chinese exporters.
Upgrading has since become a necessity for export-oriented enterprises.
“It is a matter of life or death,” said Wang Mingxin, general manager of Zhejiang Xinle Textile & Chemical Fiber Co Ltd. “We must upgrade, with a particular emphasis on research and development.”
“About 90 percent of our staff used to work in the manufacturing department. In the future, we expect only 40 percent to work in manufacturing, and the others in development and design,” Wang said.
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