China's manufacturing industry has come a long way since the 1990s. Today, China is the world's largest manufacturer, producing a wide range of goods and playing a major role in global supply chains – and it continues to grow and evolve. In this blog post, we'll take a look at the history of Chinese manufacturing, its current role in global manufacturing, and the major trends to watch in the decade ahead.
If you've ever wondered why seemingly every consumer product has a label that says "made in China," it all began in the 1970s.
At the time, Chinese manufacturing tended to focus on heavy industries like steel, coal, cement, and low-cost consumer goods. The country's leaders, however, recognized the need for a more market-oriented economy and began introducing a number of reforms, in the process ushering in a period of unprecedented development and foreign investment.
Since then, Chinese manufacturing has gradually taken on the production of most of the world’s consumer electronics, vehicles, textiles, medical devices, toys, and more, earning its reputation as the “world’s workshop.” In fact, for more than a decade, China has sat atop the throne as the world's largest manufacturing country, accounting for nearly 30 percent of the global manufacturing industry. That is a full 10 percentage points above the U.S., which China overtook in 2010.
We recently explored some of the reasons why China has attained this position, including world-class infrastructure and logistics and an increasingly skilled labor force, but the country is also:
All told, China has turned itself into a veritable powerhouse in the manufacturing realm, which begs the question, what next?
As we’ve recently discussed, China is second only to the United States in research and development (R&D) spending, exceeding $455 billion in 2022, which was an increase of 10.4% over the previous year.
China is also the world’s leading robotics market, accounting for roughly 36% of global robotics spending. Robotic technology is a vital driver of China’s higher value chain manufacturing initiative and it continues to enable Chinese manufacturing facilities to increase efficiency, cut costs, and boost quality.
China’s manufacturing sector is also at the leading edge of artificial intelligence (AI) applications, and other emerging technologies, including 5G telecommunications, big data, the Internet of Things (IoT), e-commerce and autonomous, electric vehicles. According to the Ministry of Industry and Information Technology, 110 Chinese factories have attained the international advanced level of intelligent manufacturing over the last decade, building over 2,000 new, high-level digital workshops and smart factories.
The increasing adoption of these advanced applications will also continue to drive China’s extensive and innovative logistics and transportation infrastructure and communication systems, helping to further advance and diversify the manufacturing sector.
China has achieved its global economic dominance by continuously climbing the manufacturing value chain. While it remains as dominant as ever in textiles and electronics, the country is now a world leader in industrial machinery, medical devices, household appliances, vehicles, and a wide array of other sectors. Throughout the coming decade, the Chinese manufacturing sector will further diversify, continuing its relentless climb up the value chain into even more advanced fields like robotics, biotechnology, and aerospace.
The country's medical device manufacturing sector is spearheading this charge, with aging populations, both domestically and abroad, and research breakthroughs propelling remarkable growth. The Chinese government is fostering this progress by continuing to support and invest in education, ensuring that the country’s manufacturing industry has the skilled engineers and labor force needed to continue innovating.
Positioning itself as a higher value-added manufacturing nation has also compelled China to become a world leader in quality assurance capabilities. The country’s leading facilities now combine advanced manufacturing capabilities with some of the most stringent quality control processes, including advanced product testing using the latest automated electronic test fixturing and software to eliminate human errors. The most prominent example of this is likely Apple’s long-term manufacturing partnership with Foxconn's facilities in China. With sophisticated manufacturing facilities and stringent quality standards, Foxconn produces roughly 40% of Apple’s products, including the iPhone, the iPad, and the Mac.
Another strategic goal for Chinese manufacturers is to diversify their customer base and become less dependent on a few traditional markets. Southeast Asia, Africa, India, the Middle East, and Latin America are all regions in which Chinese leaders have identified as new growth opportunities for the decade ahead.
The Government of China has initiated a wide range of policies and programs (including subsidies, tax incentives, and robust regulatory standards) to promote more sustainable manufacturing practices, including adopting renewable energy sources. This has led to factories in China now actively implementing large-scale waste reduction and recycling programs and seeking out international partners.
A well-known example of this is Nike and Hue Yuen, one of the world’s largest footwear producers, who have actively worked together to improve sustainability throughout the footwear supply chain. Their project has reduced water consumption, improved energy efficiency, eliminated waste, and enhanced accountability for sustainable practices.
Many of the country's leading facilities are also adopting a collaborative approach, both domestically and abroad, to share knowledge and deploy technology at scale. One such example is the Global Lighthouse Network (GLN), a collective of over 100 manufacturing facilities – 37 are in Greater China – which works together to form an "intelligent manufacturing community," fostering knowledge exchange with a strong focus on sustainability practices and priorities.
All told, the 2020s promise to be another exciting decade for China, as it further solidifies itself as a global leader in robotics, manufacturing, logistics, and more.
Kingstec has worked with China’s leading facilities for over 40 years and can help your business navigate this dynamic, fast-evolving market, acting as an extension of your mechanical and electrical engineering, design, and logistics departments.
Call us today to learn how your business can partner with China’s world-class, cost-efficient manufacturers.
