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The Emergence and the Implications of China as the World's Factory - Essay Example

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The author suggests that China may be losing its advantage as a global manufacturing hub due to the recent wage increases for after several incidents of strikes and suicides by workers and China may lose its status as world’s factory due to the increasing cost of manufacturing here…
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The Emergence and the Implications of China as the Worlds Factory
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Download file to see previous pages Over the last two decades, China has become the biggest producer of manufacturing goods in the world with a global manufacturing share of 19.8% (MercoPress 2011). Meaning that 1 in 5 manufactured products today are made in China - clearly, China has emerged as the world’s factory. The early years of China’s emergence as a manufacturing hub According to some reports, around 1850, China had a 30% share of global manufacturing but lost its edge by the end of the 19th century and its share of global manufacturing stood at 6%. By 1930, it was as low as 3%. Then, in the 1980s, China opened its economy and began welcoming foreign investments. The world’s factory saw its first emergence as a potential export hub when manufacturers from Hong Kong began to move their apparel and toy manufacturing units to South China in order to take advantage of the low wages there. In the 1990s, the scope expanded to several other merchandise categories as China improved its infrastructure and quality of labor while keeping the wages low. Due to lower assembly costs of manufactured goods, electronics companies from Korea, apparel manufacturers from Hong Kong, and computer manufacturers from Taiwan shifted most of their manufacturing operations to China. The key manufacturing activity was to import the manufacturing components, process them, and export back. In 2000, these processed components formed 55% of the Chinese exports and 41% of the total imports of China were actually for reprocessing them for exports. From 1993 to 2002, China’s manufacturing exports jumped from $60 billion to $320 billion with office and telecom equipment accounted for $52 billion. In terms of Foreign Direct Investment (FDI), in 1990 China received 18% of all Asian FDI, and by 1999, China had a lion share of 61% of all Asian FDI. By the 2001-2002, most of the biggest brands in the goods industries invested heavily in China to secure their manufacturing. For example, by 2001, the investment of Japanese electronics major Toshiba in China totaled more than $1 billion – in 37 factories in China.  ...Download file to see next pages Read More
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