According to media reports such as China News Service and Phoenix.com, China's unofficial, non-profit academic research platform China Information Technology 100 and Deloitte jointly released the "2016 Global Manufacturing Competitiveness Index" report the day before yesterday. They surveyed more than 500 manufacturing industry CEOs and executives around the world and ranked the manufacturing competitiveness of each country on this basis.
Innovation ecology is a competitive advantage
The ranking shows that China’s manufacturing industry ranks first in competitiveness. The report believes that this is not only because of its traditional low-cost advantage, but also because China is successfully developing its own innovation ecosystem.
The report also pointed out that China’s R&D expenditure has increased significantly. There are a large number of science and engineering graduates every year, and it attaches great importance to technology commercialization and strong growth in venture capital investment.
However, the report reminds that China’s manufacturing industry faces a series of challenges against the backdrop of greater economic downward pressure. Industrial activity continues to fall as demand declines, leading to factory overcapacity. The share of manufacturing in gross domestic product (GDP) fell, with much of it shifting to the services sector.
Labor costs have increased fivefold in 10 years
Manufacturers are also worried about rising labor costs.
In the 10 years since 2005, China's labor costs have increased fivefold. Due to rising labor costs, cost arbitrage between China and developed economies has declined. Some companies in developed economies have moved their production to lower-cost countries or moved back to their own countries.
The aging population is another concern for manufacturers planning to invest in China. The report points out that by 2050, China's elderly dependency ratio may triple its current level.
The report suggests that although the competitiveness landscape will continue to change, high-quality talents will always be at the top of the list of drivers of competitiveness. Therefore, only by continuously cultivating high-value talents needed by leading enterprises and advanced manufacturing industries, and improving innovation capabilities and regulatory efficiency, can the country maintain prosperity.
ANNA