Made In China, Not That Difficult.

Editor's note: the rite of passage made in China

Anyone who has been to WAL-MART or IKEA in the United States in recent years will feel the power of "made in China" there. About 70% of the goods there are from China.

In 2007, a book named "one year away from China" was sold well in the US and China. Sara is a housewife of a middle-class family and a former business reporter.

She did an experiment in 2005 - no Chinese products all year round, and the family's life became a mess. "In the next 10 years, I may not have the courage to try it again."

Faced with the $10 pair of Chinese children's shoes and the $60 pair of Italy children's shoes, she had to admit, "prices always win over our values.

We simply can not refuse products sold in China. "

China's manufacturing industry has swept the world in the past decade, especially in the last five or six years. The status of the world factory has been beyond doubt and can not be defended. At present, 70% of the world's shoes and toys, more than 50% of the PC, mobile phones, color TV, air conditioners, and 40% of the textiles are produced in China.

However, since last year, the price of this invincible Chinese edge has begun to blunt. The RMB appreciation, export tax rebate reduction, labor force becoming expensive and raw material price rise, a number of factors superimposed, such as clothing, toy shoes, these typical "made in China" costs increased by 30% left and right.

The global recession is coming back more than 20 years after leaving the world economy. It is inevitable that the "made in China" that is highly dependent on external demand will be clouded.

How will companies respond to rising costs of three or four times their own profit margins?

The past 20 years are indeed the golden age of the world economy. The locomotive of the world economy has experienced only two short and mild recessions, and the global recession has not happened at all.

The last 5 years have been the 5 year of the unprecedented prosperity of the world economy, and the 5 year that has been officially formed in China.

Made in China has been enjoying the "post dividend" and "cost concessions". Just like a young man who has just grown up, he has not yet experienced any real challenges.

There is no doubt that China's manufacturing industry, which has been in the wind for more than ten years, is facing a big exam. Although we are eager to know the answer, the enterprise needs time to answer it.

Therefore, until the 2008 schedule was over half, we sent reporters to the north to inquire about the results of the final examination.

What surprises us most is that pricing power is not unreachable. Chinese enterprises have begun to have pricing power, even in the most traditional manufacture of shoes and toys, which is characterized by labor intensive and export oriented "made in China".

"You don't have to threaten me.

If you leave Huajian today, you must be sorry. "

This is the concluding statement of the German buyer who was thrown by the chairman of Dongguan Huajian group.

Two months later, the German side yielded to the fact that the price of Huajian was 20%.

Such things happen not only in individual businesses.

In May of this year, the average price of shoes exported from Dongguan increased by 27.3%.

The next thing that surprises us is that the confidence in China made by buyers and sellers has not been shaken as imagined.

"China's labor force may not be the cheapest, but it must be the most cost-effective.

In Southeast Asia or Africa, it is impossible to find such a large number of skilled craftsmen in China.

The cost performance of labor is the same, and the price performance of products is the same. "

Sun Lei, a buyer who has been swaying around the world for a long time.

This is why he accepted the price increase made in China.

It is also expected that the Guangzhou customs data show that the PRD footwear export enterprises have reduced by nearly half.

But as we go deeper, there is a new accident: the number of enterprises has been reduced, and the capacity has not decreased. Unemployment has not increased. The equipment and workers of the bankrupt enterprises are like the water spilled into the beach and quickly absorbed by their peers.

The weak are eliminated, but the stronger are stronger, and the efficiency of resource allocation and the competitiveness of the whole industry are improved.

These findings coincide with the view of Shen Minggao, chief economist of Citibank China Limited, whose competitiveness is not sustainable by artificially lowering factor prices, and that enterprises that survive only in a distorted cost environment should be eliminated.

After the normal price of the factor, the efficiency of the whole economy will increase, the income distribution will be more reasonable, and the independence and sustainability of China's economic growth will be enhanced.

The cost of manufacturing in China has begun to normalize, which means that China's economy is heading for a bright future.

For those who are looking for a policy shift, such a conclusion may be merciless, but the decision making authorities adhere to the established strategy of "engaging in factor price" is unswervingly crucial to the future of China's economy.

Because it is unthinkable that in China, where natural resources and environmental resources are scarce, it is possible to maintain a long-term sacrifice of its own resources to subsidize the manufacturing industry all over the world.

China's manufacturing has been upgrading and pformation, such as crescent handicraft factory and pharmaceutical company, which no longer stay in the manufacturing process, but extends to the "Smiling Curve" at the end of design and development. They have crossed the survival stage and entered the development stage, so as to distance themselves from the real "China creation", but they have already taken their fate in their own hands.

Before making in China, it was made in Japan, made in the United States before the Japanese made, and the Japanese invented the TOYOTA production mode and total quality management. The Americans invented the Ford production line and the 6 Sigma quality management law. The two countries also produced a large number of great and famous entrepreneurs and entrepreneurs.

By contrast, it is far from enough to generalize convincing things made in China.

In this sense, the 2008 examination is only the rite of passage made in China.