Business Prospects in China Manufacturing Industry

Business Prospects in China Manufacturing Industry

Executive Summary
China is the world's largest producer. It's been a popular manufacturing destination from past decades due to its low labour costs, technically skilled workforce, and good infrastructure. However, China's competitiveness and manufacturing profile are shifting, with more developed regions shifting up the value chain and labour-intensive manufacturing relocating inland. In 2019, China accounted for 28.7% of global industrial output.
China Economic Performance: China was the only major economy to grow in 2020, although at its slowest pace in decades, with a 2.3% growth. According to the National Statistics Bureau, the country's GDP increased by 6.5% in the fourth quarter of 2020, outpacing the 6% growth rate seen at the end of 2019, before the coronavirus gained strength. Moreover, During the first half of 2021, Chinese economy increased by 12.7% following a strong rebound in the first half of 2021, China's economic activity slowed dramatically in the second half of this year.
Impact of COVID-19 over China Manufacturing Industry: According to the National Bureau of Statistics (NBS), China's industrial production witnessed growth in 2020 due to the solid growth in the high-tech and equipment manufacturing industries. In 2020, the country's value-added industrial output increased by 2.8% yoy. The expansion expedited from a 2.3% increase in the first 11 months of 2020. In addition, Manufacturing output increased by 3.4% year on year in 2020, the largest growth rate of the three major sectors: manufacturing, mining, and the production and supply of goods. Moreover, Due to the coronavirus pandemic, many companies have relocated their manufacturing operations from China to other countries in order to reduce their dependence on China's manufacturing industry. Japan has already set aside USD 2.2 billion to assist its manufacturers in shifting out of China. Due to the growing outbreak, Japanese automaker Mazda quickly relocated a portion of its production from Jiangsu, China, to Guanajuato, Mexico. Despite the high installation costs, the situation is expected to be helpful in the long run.
Driving Factors
Increasing FDI penetration in China region: According to the 2021 World Investment Report published by UNCTAD, FDI inflows into China increased by 6% from USD 141 billion in 2019 to USD 149 billion in 2020. This was due to the successful pandemic containment measures and the quick recovery.
Strengthening Trade Performance in China: In 2020, China became the only economy across the globe to achieve positive commodity trade growth. The growth in trade was a result of successful prevention and control of the epidemic in China. China's manufacturing industry caught the eye, when the global manufacturing industry impeded, not only enabling global orders to return to China after the third quarter, but also authorizing China's foreign trade to still attain good results.
Challenging factors
Increasing Factor Cost: Increased wages and the renminbi's appreciation have dimmed China's exports in recent years, focusing worldwide attention on the country's future viability as a low-cost manufacturing center. Many multinational corporations that manufacture labor-intensive goods, such as textiles and apparel, are actively seeking to diversify outside of China in order to lower costs and minimize political and supply-chain risks. Beverage, fabricated metals, food, and tobacco processors in China are also aware of the growing costs, including packaging costs. However, because of their regional focus, it's less of a global competitive issue but more of a question of which participants in the value chain will generate the most value.
China Manufacturing Sector Performance
China accounts for one of the largest shares in terms of manufacturing considering output. Steel, car components, chemicals, electronics, and robots are among China's most important manufacturing industries. China's industrial production continues to grow, with strong performance in the high-tech and equipment manufacturing industries. During the first ten months on 2021, China's textile industry expanded steadily moreover, China's online retail sales of clothing products increased 14.1% year on year in the January-October period, exceeding the 3% average growth rate over the previous two years, according to official data from Chinese media outlets.
China is the world’s largest producer, consumer and exporter of consumer electronics. China also remains the world’s largest manufacturer of mobile phones, computers and televisions, respectively producing over 90%, 90% and 70% of these devices in 2018. In 2019, China’s consumer electronics market was RMB 126 billion in size. In 2020, the shipment volume of smartphones in China amounted to almost 326 million units, which declined by 11.2% y-o-y.
China's automobile industry accounts for over a third of worldwide auto sales, and the industry is critical to the Chinese economy, with more than 40 million people relying on it for employment. In 2018, Chinese passenger vehicle sales totaled 9,980,000 units. Weak economic growth, the trade dispute with the United States, and strict new emission requirements announced in the summer aggravated the sales crisis in 2018. For the second year in a row, the country's car market dropped in 2019 with total car sales declined by 8.2% to slightly under 25 million.
Scope of the Study
The following synopsis is based on the report " Business Prospects in China Manufacturing Industry" published by Makreo Research and Consulting. The report delves deeply into various parameters such as market size, segmentation, value chain analysis, and industry cause and effect analysis. The study includes market dynamics that provide an understanding of industry opportunities, driving forces, major challenges impeding growth, and an analysis of future opportunities that may help market players capitalise on untapped business potential in the specific geography.
The report helps reader to gain information on following areas:
What is the value and volume outlook for the Business Prospects in China Manufacturing Industry in the past, present, and future?
Identification of factors important in changing the market scenario, increase in opportunities,
Identification of key manufacturing sector performance in China that can influence manufacturing market on a global scale are all provided.
To understand the country's competitive outlook.