Intensive situation of manufacturing industry in china
China is the largest exporter and the second largest importer in the world. There became the largest manufacturing country in the world, overtaking the U.S. in 2010. This has raised debate that whether China has lost edge as world’s factory. In recent years, the average income in China has steadily gone up as China’s labor cost has grown by over 60 percent since 2009. However, Vietnam’s labor cost is 40 percent of that in China, while in Bangladesh and Myanmar labor costs are as little as one-fifth of China’s labor cost.9 Other factors are also contributing to foreign manufacturers’ profit decline in China, such as: the appreciation of the Renminbi, variability of various local tax rates, stricter regulations on environment protection, as well as government’s policies towards a more service-based economy.
In addition to cheaper labor cost, some Southeast Asian countries have put more effort into attracting foreign investment, such as lowering or exempting import tariffs on equipment required by manufacturing activities. However, unsettled political situations, undeveloped infrastructure, unskilled workers, incomplete industry chain systems, and a smaller domestic market in the Southeast Asian countries remain the biggest concerns for foreign investors.
Throughout the years, China is still remains competitive manufacturing base while some foreign manufacturers moved out and relocated to Southeast Asia. Many foreign manufacturers have formed relationships with the Chinese government and customers while operating in China. Some foreign manufacturers said they would keep close observation on both China and Southeast Asia and they would like to stay in China if operation costs do not inflate to unsustainable levels. Meanwhile, China continues to introduce favorable policies for high-end and value-added