BBC Documentaries l Factory of the world l made in china
Chinese products seem to be everywhere: the majority of tags, labels and stickers display the legend “Made in China.” The Western consumer may ask, “Why is everything made in China?” Some may think the ubiquity of Chinese products is due to the abundance of cheap Chinese labor that brings down the production costs, but there is much more to it. Here are five reasons China is "the world's factory.”
Lower
Wages
China is home to approximately 1.35 billion people, which
makes it the most populous country in the world. The law of supply and demand
tells us that since the supply of workers is greater than the demand for
low-wage workers, wages stay low. Moreover, the majority of Chinese were rural
and lower middle class or poor and until the late 20th century when internal
migration turned the country's rural-urban distribution upside-down. Immigrants
to industrial cities are willing to work many shifts for low wages.
China does not follow (not strictly at least) laws related
to child labor or minimum wages, which are more widely observed in the West.
However, this situation may change. According to the China Labour Bulletin,
from 2009 to 2014 minimum wages have almost doubled in mainland China.
Shanghai’s minimum hourly rate is now up to 17 yuan ($2.78) per hour or 1,820
yuan ($297.15) a month. In Shenzhen the rate is 1,808 yuan per month ($295.19)
and 16.50 yuan ($2.69) per hour based on an exchange rate of 1 yuan = $0.16.
The huge labor pool in China helps to produce in bulk, accommodate any seasonal
industry requirement, and even cater to sudden rises in the demand schedule.
Business
Ecosystem
Industrial production does not take place in isolation, but
rather relies on networks of suppliers, component manufacturers, distributors,
government agencies and customers who are all involved in the process of
production through competition and cooperation. The business ecosystem in China
has evolved quite a lot in the last thirty years. For example Shenzhen, a city
bordering Hong Kong in the south-east, has evolved as a hub for the electronics
industry. It has a cultivated an ecosystem to support the manufacturing supply
chain, including component manufacturers, low cost workers, a technical
workforce, assembly suppliers and customers.
For example, American companies like Apple Inc. (AAPL) take
advantages of supply chain efficiencies in the Mainland to keep costs low and
margins high. Foxconn (the main company that manufactures Apple products) has
multiple suppliers and manufactures of components that are at nearby locations,
and it would be economically unfeasible to take the components to U.S. to assemble
the final product.
Lesser
Compliance
Manufacturers in the West are expected to comply with
certain basic guidelines with regards to child labor, involuntary labor, health
and safety norms, wage and hour laws, and protection of the environment.interesting documentaries Chinese factories are known for not following most of these laws and
guidelines, even in a permissive regulatory environment. Chinese factories
employ child labor, have long shift hours and the workers are not provided with
compensation insurance. Some factories even have policies where the workers are
paid once a year, a strategy to keep them from quitting before the year is out.
Environmental protection laws are routinely ignored, thus Chinese factories cut
down on waste management costs. According to a World Bank report in 2013,
sixteen of the world’s top twenty most polluted cities are in China.top documentaries
Taxes and
Duties
The export tax rebate policy was initiated in 1985 by China
as a way to boost the competitiveness of its exports by abolishing double
taxation on exported goods. Exported goods are subject to zero documentary free percent value
added tax (VAT), meaning they enjoy a VAT exemption or rebate policy. On the other
hand, the U.S. does not have a VAT and import taxes are only applicable to
certain goods like tobacco and alcohol. Consumer products from China are
exempted from any import taxes.good documentaries Lower tax rates help to keep the cost of
production low.
Currency
China has been accused of artificially documentaries depressing the value
of the yuan to provide an edge for its exports against similar goods produced
by a U.S. competitor. The yuan was estimated to be undervalued by 30% against
the dollar in late 2005. The Chinese yuan has, however, been steadily
increasing in value against the dollar over the past few years. According to
the Bank for International Settlements, the real appreciation of the yuan documentaries online between the end of 2011 and March 2014 was about 7%. China keeps a check on the
appreciation of yuan by buying dollars and selling yuan, a practice that has
swelled Chinese foreign exchange reserves to approximately $4 trillion.best documentaries
The
Bottom Line
In the recent times,science documentaries pundits have wondered if China will
lose its spot as "the world's factory” as emerging economies offering
cheap labor and rising wages dull China's competitive edge. The availability of
cheap labor is just one of the many factors that have made China a
manufacturing hub, however, and it will take more than cutthroat desire for
emerging economies to set up a business ecosystem that can compete with
China's. For some time to come, China will be "the world factory” with its
low production costs, huge labor pool, vast talent base and business ecosystem.National Geographic
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