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Some experts pointed out that in the past few years, China's manufacturing cost advantage has been greatly weakened. If the time goes back to 2005, then the cost of landed Chinese goods to the United States would be less than 25% to 30% of the cost of the United States. However, according to analysts, two-thirds of this cost gap has now disappeared.
Maurer said that a series of factors such as the rise in workers' wages, the appreciation of the renminbi, and the continuous increase in logistics costs sent to the rest of the world are pushing up the cost of manufacturing in China. Since Prince Industries opened its factory in Shanghai a decade ago, China’s wages have risen by an average of 12% annually, while the Chinese currency has appreciated by 25% against the US dollar each year. As the minimum wage has gradually increased, the hourly wage has also risen. At the same time, in order to attract more skilled workers, manufacturers have to raise their wages.
He said that if this trend continues, in the next four to five years, China's manufacturing costs will be in line with the United States.
With the rise in the cost of manufacturing in China, there are reports that some factories have already withdrawn from China and moved to places where manufacturing costs are cheaper. Despite this, few people think that there will be a large number of foreign companies that will withdraw from China. Because China's domestic demand is growing at an annual rate of 8% to 10%, even if they decide to withdraw from the export processing plant, they will also convert these export factories into factories for the Chinese domestic market. China will have a large market and its demand will grow steadily. Some companies believe that such relocation is not worthwhile because the level of productivity in the Chinese mainland cannot meet their requirements.
It is an indisputable fact that China’s manufacturing advantage is gradually weakening. The era of cheap production in China has ended. Although foreign companies will not withdraw from China at present, we cannot hope for this. We should strengthen our own technology and make “Made in China†"China created" development, and continuously improve the country's design level.
In recent years, the cost of manufacturing in China is rapidly rising. China is no longer the low-cost manufacturing base pursued by many manufacturing companies around the world. Research by AlixPartners, a consulting firm, shows that by 2015, the cost of outsourcing manufacturing to China will be equal to the cost of manufacturing in the United States.
March 03, 2024