[Canton Fair] A Small Number Of U. S. Companies Can Not Shake Off The "Made In China" Comparative Advantage.

A report recently released by the Boston consulting company said that with the rise of labor costs in China and

Industrial relocation is hard to achieve in the near future

The report suggests that industries most likely to move back include

The report also believes that the reflow of industry brings back jobs, partly helping solve the employment problem in the United States.

The report says: with the increasing cost advantage of "made in the United States", the United States will add 2 million to 3 million jobs in the next five years.

According to the report, many enterprises realize that consumers are more likely to ease inventory pressure than consumers.

In the 110th session

However, at the 110th Canton Fair, a number of domestic and foreign companies have found that the trend of such industry relocation is not as obvious as reported in the report.

GE, a multinational group, produces products in China, including household appliances, consumer electronics and other industries. Its booth staff said that the company did not plan to shrink production scale in China.

Even the Orient Fan company, which is considered to be "hard" to produce in China because of increased costs, has no intention of moving back for the time being.

In addition, the reporter learned from some domestic exhibitors that the purchasers of the Canton Fair were hesitant to raise the price of Chinese products, but they still had more intention to purchase. Moreover, some old customers did not lower their purchasing intention because of raising prices.

Guangzhou Jie Wei Xun Electronics Co., Ltd. is a company that manufactures vehicle mounted DVD screens, and its products are exported to the United States and other places.

Mao Shenghong, a salesperson, told Xinhua that despite the slight drop in demand for products this year, the overall stability in the past two years has been achieved.

The product of the Canton Fair is about 5% higher than that of June this year, and buyers are basically acceptable.

Xie Yu Yu, general manager of overseas business department of Amoy technology limited, believes that because the US labor cost is still relatively high, even if some US capital enterprises withdraw from China, they will not immediately choose to return to local production.

Some experts and people in the industry are also not optimistic about the beautiful picture of job reflow mentioned in the Boston consulting company's report.

According to reports, Dan Schmacke, chief executive officer of Outdoor Greatroom, a US outdoor product company, believes that the trend of manufacturing industry returning to the US will not go too far. "Some categories of products are no longer produced in the United States, such as woven outdoor products and wicker furniture, and we do not have to outsource them in China".

Yuan Jiang, a senior macroeconomic analyst at the strategic planning department of the Agricultural Bank of China, said that the relocation of US capital enterprises is actually a microcosm of the "pformation of the industry" and the pformation of the US economy. Its essence is a process of the evolution of the reverse economic structure, showing the desire of the United States to solve the serious unemployment problem in China.

But on the one hand, the manufacturing industry that moves back is capital intensive, so it is difficult to create large-scale employment opportunities. On the other hand, the cost of domestic labor in the United States is high, and whether the products after the manufacturing industry move back is competitive in the future market remains to be seen.

If the product is not competitive, it will be difficult for the industry to survive on the mainland. Therefore, it is wishful thinking to solve the problem of employment and promote economic growth.

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Rising costs do not harm core competitiveness of products, but technological innovation improves productivity.

Although China's labor costs have risen rapidly in recent years and the price of raw materials has been rising and fluctuating frequently, the continued appreciation of the renminbi has also raised pressure on the export enterprises. However, for some export enterprises, the cost or price increase brought by these factors has not damaged the core strengths of the enterprises.

Wu Bo Ye, President of Carrefour Group Global Purchasing, accepted an exclusive interview with Xinhua news agency at the 110th Canton Fair.

When asked whether the rise in China's cost will affect the competitiveness of Chinese products, he said that the world is facing the problem of rising costs, and so does China.

He said that although people worry that the increase in labor costs and raw material costs will affect China's competitiveness, foreign buyers will still have a high price performance ratio, which is China's biggest competitive advantage, especially in low-end products.

Chen Mingfu, sales manager of KHIND, a fan manufacturer in Malaysia, believes that rising labor costs in China will not reduce the competitiveness of Chinese products.

Compared with Malaysia, the average wage level of Chinese workers is still low compared with that of the same industry, and still has comparative advantage.

In some labor-intensive industries, it is expected that in the next few years, similar products produced by many countries and regions in the world will still be unable to compete with Chinese products.

The rising cost has not damaged the core strengths of Chinese enterprises, and the cost pressure has forced some enterprises to carry out technological innovation and improve labor productivity.

Wu Bo believes that although wage increases will increase procurement costs, wage increases mean increased purchasing power, which is good for retailers and producers.

At the same time, the increase of costs will also promote enterprises to increase productivity to maintain their competitive edge.

According to him, some Chinese enterprises have begun to strengthen cooperation with Carrefour to explore new ways of production so as to avoid over assembling and over processing, thereby reducing costs.

Li Yichuan, director of Coca-Cola China's booth at the Guangzhou Fair, told Xinhua that despite the rise in labor costs, the company's production costs were increased, but there were various ways to offset such a rise in costs, thereby maintaining the core strengths of the product.

Li Yichuan said the Coca Cola Co is mainly to offset the increased costs in two aspects: first, product innovation, namely, the implementation of product diversification strategies, such as the introduction of a new product, fruit milk beverage, "fruit milk best" in the Chinese market in 2009.

The two is technological innovation.

The packaging of Coca-Cola's mineral water brand "ice dew" has adopted environment-friendly lightweight bottles. Compared with the previous packaging, the raw materials and carbon emissions can be reduced by 25%-35%. After use, bottles can be twisted into a twist shape to reduce volume and facilitate recycling.

At present, the company has also issued a plant environmental protection bottle. 30% of its materials are extracted from plants, which are easier to degrade than ordinary plastic bottles, and are more environmentally friendly.

In addition, Li Yichuan believes that production line filling technology also has room for upgrading.

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The "comparative advantage" must also be "upgraded" industry and trade structure adjustment as the permanent cure.

In fact, many divestment enterprises tend to move to relatively low cost areas, such as Vietnam and Kampuchea in Southeast Asia.

Mr. Yu of Orient Fan believes that the gap between labor costs and the overall production cost of China and the United States will be narrowed. Eventually, the US capital enterprises will largely withdraw from China and return to the mainland.

At a high-level seminar on commemoration of China's accession to the WTO 10th anniversary and opening up, development and innovation in Guangdong, Zhang Yansheng, a researcher at the Institute of foreign economics of the national development and Reform Commission, said that the current rate of China's new competitive advantage is much slower than the rate of decline in the old competitive advantage.

China's OEM and low end competitive advantage in the cheap labor, land, environment and RMB will be replaced by new competitors within 5-10 years.

Yuan Jiang believes that the development of the real economy to restore the overall vitality of the economy is the basic strategy of the future US economy.

Based on this, the current phenomenon of enterprise relocation will continue, and the scale may be bigger and bigger.

Part of the American reflow industry is the pillar industry that China currently focuses on, such as high-end machinery, electronic information and so on.

Due to the accumulation of technology and research and development in the US, the development of related industries will be the great competitors of China in the future.

Considering the future competition between China and the United States in high-end manufacturing industry, the introduction of high-end technology from developed countries in Europe and the United States will be more difficult.

With this, disputes such as trade barriers and intellectual property rights will become more intense.

It can be seen that the comparative advantage of "made in China" itself has arrived at the time of "pformation and upgrading".

Wu Bo pointed out that although China has obvious comparative advantages, especially in the low-end products, low-end products should not be China's strategic focus in the future.

He advises Chinese companies to develop high-end products, thereby avoiding the adverse effects of rising costs.

In fact, the competitive advantage brought by technological innovation has been reflected in the cost reduction industries, such as digital products.

The sales staff of Xie Huayu and Cai Xun International Limited believe that digital products with high technology content are always able to offset the rising cost of labor and raw material prices through technological innovation and compressing other costs, so that the product always has a competitive advantage.

Therefore, readjustment of industry and trade structure is the radical solution to the problem of industrial relocation and employment outflow. The fundamental way out is to change the mode of economic development.

Zhang Yansheng believes that China's economic model will go through "OEM", "independent production", "low price competition strategy", "differential competition strategy", "simple imitation", "creative imitation and technological management innovation", "pformation of low end and end processing assembly process > high and medium end and manufacturing process".

Yuan Jiang believes that the first step is to change the mode of economic growth, increase the domestic consumption demand through the adjustment of income structure, and gradually pform the export oriented economic mode into an internal demand driven economic mode.

Two, we should do well in internal work, actively promote the upgrading of industrial structure and cultivate the core competitiveness of industry.

After the financial crisis, China's strategic direction of cultivating strategic industries is right, but in terms of relevant policy support, we must follow the law of industrial development, and integrate the "external technology" and "internal training base" so as to ensure that the policies are well matched and avoid wasting resources.

Three, we should make full use of the current huge foreign exchange reserves and strive to acquire more foreign high-end technology through the negotiation power accumulated by China's foreign exchange reserves, so as to accelerate the upgrading of domestic industries and enhance their competitiveness.

"As long as the policies are accurate and the industrial structure is successfully upgraded, the comparative advantage of the overall export will not be reduced because of the loss of the competitive advantage of the labor-intensive industries."

Yuan Jiang said.