Made in China has made a huge contribution to the world. According to estimates by the United States, Made in China has reduced spending by US consumers by 700 billion US dollars in recent years. It is precisely at the same time that such a large amount of cheap Chinese products and Chinese resources are being consumed by enterprises in these countries, and Chinese manufacturing has impacted their domestic manufacturing to a certain extent. Because Chinese products are much lower in price than domestic products and are very affordable, stores in many countries generally have no income until the end of the year.
In recent years, my country’s mineral products have not been subject to resource taxes, which has made my country’s energy prices very low, and electricity and oil fees are relatively cheap, resulting in relatively low prices for all export commodities produced in China. Under such circumstances, in order to ensure China’s sustainable development, the Chinese government must increase the country’s resource tax rate to avoid excessive and cheap use of Chinese resources by foreign companies.
What dominates this transformation must be the actions of the Chinese government. The government must issue various laws and regulations as soon as possible to adjust the prices of domestic production factors, thereby affecting the prices of export products, forcing the upgrading of Chinese manufacturing, and thus improving China’s industrial structure. Eventually change the situation of high consumption, high pollution and cheap exports.
Compared with the real estate industry that developed only 10 years after the Asian financial crisis, “Made in China” is not only the engine of China’s economic growth, but also absorbs about 100 million employed people, most of which are migrant workers from rural areas. The prospect of “Made in China” is related to the future of social stability and reform. Only by keeping “Made in China” in China can we gain time for further reforms and economic upgrading.
Where does the “world factory” go? It’s a critical moment
The world economy fell into a low ebb because of the subprime mortgage crisis in the United States. The three largest economies in the world: the United States, Europe, and Japan have sluggish demand, and China’s foreign trade orders for export manufacturing have decreased accordingly. Although China’s exports continued to grow in 2008, the growth rate has fallen sharply. This indicates that China may face a more difficult situation in 2009. The cost increase is also causing the difficulties of export manufacturing. This includes several aspects: rising prices of raw materials, energy and land, labor costs and environmental protection costs, and fewer and fewer tax incentives for exports. Low cost is the main weapon “Made in China” wins in international competition. Over the past 20 years, it has been cheap labor, land, and energy that have led the manufacturing industry to move from places such as Taiwan, Hong Kong, and Malaysia to mainland China. China is losing this competitive advantage.
Find a way out
The fundamental purpose of manufacturing enterprises is to meet the ever-changing needs of consumers with lower costs, higher quality, and more convenient ways. In the global market, consumers and corporate customers have become dominant. They can find the cheapest, best and most convenient products and services from various sales channels. Competition has not only spread across regions, but also across the world. To achieve the fundamental goal of such competition, it must be closely related to the manufacturing process to achieve this goal. The activity process of the general manufacturing industry can be broken down into continuous links such as raw material production, product design, procurement at all levels, warehousing and transportation, order processing, wholesale sales, and retail, that is, the supply chain process.
Manufacturing needs IPD and ISC
The disparity in the final competitive results of different manufacturing companies lies in the differences in the process of dealing with the supply chain. Because each link has a different value to the final product, how to obtain higher value in this process is obviously the essence of manufacturing. Especially in the current era of economic globalization, how to optimize each manufacturing link from the perspective of global resource allocation, thereby integrating the entire supply chain process, and continuing to update, has increasingly become the key for modern manufacturing companies to participate in global competition.
If the cost of this raw material is only 1 yuan in the product price of 4 yuan, and it is difficult to save further, then, is there no high value in this link? Facts have proved that if raw material production and product design are linked together, 75% of the value creation ability falls on product research and development; on the contrary, only 25% of value can be created by saving raw material costs. In other words, improving the technical level of the enterprise and optimizing the product structure, especially the product R&D design and production decision-making, can get rid of the constraints of raw material costs and create higher value. This is what we are talking about IPD (Integrated·Product·Development), that is, manufacturing companies need to continuously improve the efficiency of the entire system and improve the products, so as to create higher value in global competition. In order to strengthen IPD, Mattel invests a lot of resources in research and development every year, and has a dedicated laboratory and a cross-departmental research team specializing in product design and development.
The problem for Chinese companies is not only that they lose out to multinational companies in the production of raw materials and lack product innovation capabilities. In other higher-value links, they also lack the right to speak and are on the weaker side of the competition. Mattel controls all levels of procurement, warehousing and transportation, order processing, wholesale sales and other links, and has formed alliances with large chain stores such as Wal-Mart at the retail end, only to produce the lowest value The links are outsourced to Chinese manufacturing companies. Compared with the aforementioned “hard one yuan” of raw material production, the advantages of these links are another “soft three yuan” that constitutes a 4 yuan retail price, because they have greater value and higher value mining potential.
Simple comparison shows that even in the current technology level and product structure, manufacturing enterprises need to control, influence and tighten the entire supply chain system, optimize the allocation of resources in each link, and obtain high value instead of being scattered and isolated. Treat every link. This is what we call ISC (Integrated·Supply·Chain).