China Manufacturing Workshop

China Manufacturing Workshop

China Manufacturing Workshop

Introduction

Since China opened up its borders to the world, manufacturing has played an integral role in its developing economy. Until a recent explosion of growth in the Chinese economy, the abundance of cheap labour and tax incentives for firms who brought their operations to China were almost too good to pass up. Firms of all kinds came to china from abroad hoping to take advantage of and exploit the ideal country to manufacture their products. Often the foreign company would not own the factory directly, but either lease it or contract production out to local factory owners. The miniscule costs to set up and produce in China made it the number one choice of firms all around the world. China's manufacturing sector has also been the main driver in behind the countries' unprecedented and explosive economic growth over the last decade. While manufacturer's in China have enjoyed great success in the past, a number of factors seem to be set to slow down manufacturing, which in turn could significantly slow China's entire economic growth. Add the fact that way too many factories have been built in China over the last few years, way too many for this slowing manufacturing sector to support and China seems to have the recipe for an investment bubble which is on the brink of popping and bringing a lot of people back down to earth and causing many thousands maybe millions of workers to lose their jobs.

Discussion

China has long been known as the “workshop of the world.” Specifically, the southeastern provinces of china are where many of the world's consumer goods are come from. Especially those consumer goods which are sold in North America. A total of eight percent of the world's manufacturing output currently comes from China. It has been the first choice of foreign firms looking for a low cost location in which they could reliably conduct manufacturing operations. China recognized early on that it was ideal for this type of operations considering it had the world's largest population and workforce and decided to exploit that. While much of the population was rural, production jobs in factories close to the cities offered a far more attractive lifestyle with wages much greater than what was available on the farms in rural China. The Chinese government, already being able to offer the world's cheapest reliable workforce, decided to make China even more attractive to overseas firms by offering major tax incentives to those willing moving manufacturing operations to its soil. Many firms found what China offered too good to pass up and have relocated their production to China, turning it into the world's workshop(www.uschina.org).

Over the past few years thousands of new factories have been built throughout china, fueled by a very positive economic outlook as well as a rapid and unbridled expansion. Local officials, especially in southeastern china have been promoting the construction of new factories in order to create well paying jobs for the ...