Some of the leading technology companies are stopping manufacturing in China and take the production of their devices to other countries. We tell you why Made in China products have the days counted.
Look around for a few moments. If you look at the electronic devices that you have near you, most of them are either made in China, or have components that come from the Asian country.
This strong presence in everything around you has not been by chance, but the result of more than two decades of policies aimed at producing large quantities of products of all kinds, for export to any corner of the world.
This industrial muscle is what has led China to become one of the world’s great economic superpowers and, therefore, the enemy to beat by many and an unsustainable model for the Chinese labor force itself. Therefore, soon “Made in China” may have less presence in the products around us. We tell you all the keys.
Made in China has the days counted
Slow and progressive investment leak: China loses bellows
In recent times, leading technology brands have begun to take production and investments to other countries that are more convenient for them based on their interests.
Powerful economies, such as India or Vietnam, have monopolized much of the production that previously fell on China. An example of this can be seen in Apple, which has taken the production of some of its iPhone models from southern China to other factories located in southern India and Vietnam.
Made in China has the days counted
Samsung has not been oblivious to this trend either. In recent years, the South Korean giant has been gradually reducing the workload of its factory in the southern city of Huizhou until it becomes irrelevant. Only a few days ago, the company announced its final closure.
The South Korean giant, the world’s largest manufacturer of smartphones, has put land in between by investing in one of the largest factories dedicated to the production of smartphones in the world located in the vicinity of New Delhi and other smaller factories in Vietnam, thus sealing its output definitive of the Chinese territory.
Southeast Asian countries are the ones with the most ballots to host the new factories that the main suppliers of components for smartphones and electronic devices, such as Foxcomm or Pegatron, are opening at a frantic pace to get production out of China, but they also sound force countries in Central America, like Mexico.
This migration of investments to Latin America not only interests manufacturers at the economic level, but also at the logistics level. That would speed up the distribution of goods across the Americas and Europe in less time and cost, than if those products should be brought from Asia.
China is no longer as profitable as it used to be
But what is the problem? Why are leading technology manufacturers leaving China? Well, the short answer would be because manufacturing in China is no longer a significant savings as it was more than a decade ago.
The Chinese government has been giving a rudder for some years so that the economy of the country changes its course and goes from being a factory to a laboratory, changing the “Made in China” to the “Developed in China”.
Made in China has the days counted
This change of direction in the economic policy that the government applies to the large companies that manufacture its products is related to the improvement of the labor and economic conditions of its employees. That is, the Chinese workforce is no longer so cheap, and there are more fiscal obligations, so production costs are no longer as advantageous.
The request for improvements in the working conditions of Chinese workers is not in vain. For years, Chinese universities have trained the generation of better-trained employees that the country has given, so they currently have the human capital and sufficient investment in R&D to contribute their own added value and position themselves as avant-garde with products of own development.
One of the best examples of this development is found in 5G and Huawei networks, which has become a key manufacturer for the deployment of 5G networks worldwide, no matter how much it weighs the United States.
Competition for the Chinese domestic market
With a potential of 1.3 billion customers, the Chinese domestic market is one of the main arguments for global manufacturers to choose
One of the main reasons is the reprisals, in the form of special tariffs, that the American government would take with the products of those companies that trade or import components from the Asian giant.
Therefore, China has become a kind of hot potato that, although technology brands would like to continue holding some more time, doing so can be counterproductive for their balances since maintaining production in that country can lead to a penalty in your export costs.
China’s controversial announcement with 5G … or is it a warning?
The arrival of 5G is not without controversy. For many it is one of the main reasons for the trade war between the United States and China, but its improvement over current connections is great. As always, whether this is positive or negative, controversial or reasonable, will depend on each one.
While it is true that both sides have made gestures to soften the relationship between the two countries, the damage is already done.
Manufacturers, who were no longer very satisfied with the new economic roadmap of the Chinese government, have seen the risk involved in maintaining their production in the Asian giant, so this trade war between the United States and China has put the last nail to “Made in China”, which has the days counted.