Why Should The State Council Issue A Document To Promote The Development Of Processing Trade Enterprises?

After more than ten years of development, China's manufacturing experience, technology accumulation and complete infrastructure have provided a good cornerstone for some enterprises to develop the upstream value chain, which is the key to the removal of this bottleneck.

The State Council issued a document recently (the State Council's opinions on promoting the innovative development of processing trade), and called for further development.

Labor intensive industries.

In the background of vigorously implementing the strategy of "Internet +" and encouraging entrepreneurship and innovation, it seems contradictory to continue to develop labor-intensive industries. Moreover, the low cost advantage of developing labor-intensive industries in China has ceased to exist.

In addition, there are reports that China's manufacturing cost is almost the same as that of the United States. The competition faced by China's labor-intensive industries is mainly from Southeast Asia.

So why is the State Council sending a document to promote the development of processing trade enterprises at this time? In fact, if we consider that the downward pressure on China's economy continues to increase, especially the unemployment problem that may arise, it is easy to realize that continuing to promote export oriented labor-intensive industries is an inevitable requirement to ensure the balanced and stable development of our economy.

The pressure of employment directly brought about by the decline of economic growth should not be underestimated.

Economic growth is a relatively abstract concept, but the unemployment problem caused by the economic downturn is real.

According to CICC's report, in the next two or three years, if the industry with the most serious overcapacity can reduce production by 30%, it will result in 3 million layoffs.

Once the tide of unemployment appears, to solve the problem of the survival of the unemployed, it is unrealistic to rely on self employment, because the failure rate of entrepreneurship is very high.

The above two points indicate that as long as we can solve the high cost bottleneck of labor-intensive industries, it is absolutely necessary for the government to continue to develop labor-intensive trade industries.

In my opinion, after more than ten years of development, China's manufacturing experience and technological accumulation and complete infrastructure have provided a good cornerstone for some enterprises to develop upstream to the value chain. This is precisely the key to breaking this bottleneck.

For example, in 2000,

The foundry factory of shoes is 80% in China, and in 2020, all these factories will migrate to Vietnam with lower labor costs. This trend should not be reversed.

However, there are many similar foundry enterprises in China. The scale of such enterprises is generally large and strong. Some of them are fully qualified to pform from OEM (i.e., foundry production) to OBM (that is, to run their own brands).

Footwear enterprises, so that other labor-intensive enterprises to pform, we must take a high value-added, high-tech content and even the way of branding.

In short, it is necessary for China to continue to develop labor-intensive trade industry, but we need to have a broader perspective on how to develop it.

It should be said that at present, a large number of such enterprises in China are struggling on the line of death. Whether these enterprises can survive and succeed in pformation need not only the development vision of the enterprises, but also the government should not only promote the slogans but also give more support to the labor-intensive industries through the "institutional innovation", so as to solve the problems of high taxes and financing difficulties and so on.