Three problems in the development of China's manufacturing industry

    Where will China's manufacturing industry go? Recently, at the summer summit of China Entrepreneurs Forum, entrepreneurs and scholars at the meeting jointly discussed the future of "made in China". They believe that labor costs, overcapacity and the lack of influence of brands have become factors hindering the development of China's manufacturing industry.

Labor costs rise:

    As a world manufacturing giant, China's manufacturing industry relies on low cost, high consumption and high emissions to promote growth. The rising labor cost has become a fact recognized by experts.

    Cao Yuanzheng, chief economist of the Bank of China, said the growth rate of the minimum wage in the past three years has exceeded the average growth rate of inland provinces by 15% and even higher than that in the eastern provinces, with a maximum of 30%. In addition, in the past few years, the average wage has increased by a large margin, and the average urban wage has increased by 13%. Therefore, the rising labor cost is an indisputable fact.

    Due to the increase of labor cost, the production cost has increased by 13% - 30%, which also has an impact on the supply of products. Zhao Sushan of China Li & Fung Development Co., Ltd. said: "Li & Fung does not do manufacturing, but manufacturing is a partnership. The labor cost of partners to Li & Fung is very high, and many European and American customers are unwilling to increase the price. Therefore, the work we have to do in a lot of coordination work will actually spend a lot of energy."

Supply exceeds demand:

    Overcapacity is also a major problem facing China's manufacturing industry. Statistics show that there are currently 24 industries in China, of which 21 already have overcapacity. Textile industry, clothing industry and steel industry represent overcapacity.

    Taking the iron and steel industry as an example, according to the statistics of China Iron and Steel Association, by the end of 2010, China's steel production capacity will be 800 million tons, and in 2011, the new steel production capacity will be about 80 million tons. Considering the elimination of backward production capacity of about 30 million tons, it can produce 8.5 million tons of crude steel by the end of the year. China's crude steel production capacity has reached 900 million tons by the end of 2011, according to the Institute of metallurgical industry planning. However, China's crude steel output was 683 million tons last year, and the domestic steel mills had serious overcapacity.

    In response, Cao Yuanzheng said that China's market is characterized by cheap labor and high resource consumption. "This function is now changing, including backward overcapacity, backward production capacity, the need for technological progress, and the adjustment of technological improvement. This is what we should focus on in the next step." Cao Yuanzheng said.

Insufficient brand influence:

    In addition to rising labor costs, overcapacity and insufficient brand influence, China's manufacturing industry is also affected. According to statistics, among the top 500 Chinese enterprises, 64% of them have not fully protected their brands. Among them, 80% of the brands are not fully protected by large industrial enterprises, which is very worrying. There are few well-known trademarks of Chinese enterprises, and their gold content and influence are insufficient. In addition, a large number of enterprises' trademark strategy lags behind, and even ignores the contribution to the development of enterprise brand value.

    Cao Yuanzheng said that the creation of brand is an important aspect of enterprise competition, and brand is a good enterprise.

    One of the reasons why Chinese enterprises lack influential brands is that Chinese enterprises like to do anything. Western enterprises focus on building their own important brands and outsourcing other brands, so this is what Chinese enterprises need to learn from Cao Yuanzheng.