Made In China: Is Informatization Going To The Left? Right?

On from June 17th to 18th, Annapolis, Maryland, China and the United States are holding fourth strategic economic dialogues. Vice Premier Wang Qishan and Paulson, the US finance minister, have held talks on behalf of the largest developing countries and the largest developed countries in the world. The talks cover the "very macro international topics" affecting the global subprime crisis, Sino US trade surplus and exchange rate policies.

However, this kind of macro problem has been shared by Chinese ordinary people from the volatile stock market, from rising prices, from the increasingly competitive atmosphere of businesses, and Chinese entrepreneurs feel far more strongly. These seemingly "international problems" have brought unprecedented pressure on many Chinese enterprises, especially traditional manufacturing industries.

This challenge is the challenge of life and death.

"Made in China": facing the challenges faced by military forces

On the eve of the talks, the central parity of RMB against the US dollar broke through the 6.90 psychological barrier. This is the forty-fourth new high of RMB against the US dollar this year. The appreciation of RMB has nearly 6% in six months, and the RMB has appreciated 20% since the reform.

Behind this cold figure is a cruel fact. At present, most of China's manufacturing enterprises have less than 6% profit margins. That is to say, Chinese manufacturing enterprises will lose all profits simply because of the appreciation of the renminbi.

According to authoritative statistics, China is the world's largest producer and exporter of footwear products. China's shoe production accounts for 63% of the world's total. Every year, people in the world wear at least one pair of shoes made in China.

Over the past 30 years, China's shoe making industry has been advancing vigorously, and even withstood many international anti-dumping incidents.

However, last year, Chinese shoes had suffered the first decline in overseas markets for 1 billion 300 million years, down 6% from the same period last year. In the first quarter of this year, the export volume of the footwear industry in the whole country decreased by 5.3% compared with the same period last year.

A large number of shoemaking enterprises such as Wenzhou and Dongguan have been shut down, and half of Jinjiang's shoe companies are shutting down. Most of them are "afraid to take orders" because of their negative profits.

At the same time, the cost growth reflected by the sustained growth of prices has been exposed through the continuous surge of oil prices. The implementation of the new labor contract law will accelerate the long term "low labor dividends" which are consumed by labor-intensive manufacturing enterprises in China. The currencies of major Asian exporting countries Vietnam, India, Indonesia and even South Korea are all depreciating and snatching China's original export market.

"The depreciation of the US dollar, the increase of raw materials such as petrochemicals and other industries, the increase of workers' wages and the tightening of bank funds have all encountered a certain problem before, and it is better to do something. Now many factors are concentrated together, and we can only seek survival rather than development."

Ding Ronghua, vice president of Jinjiang chamber of Commerce, said in an interview with CCTV's "economic half-hour".

One leaf knows the autumn.

As the world's factory, "made in China" relies on abundant low-cost labor force, relies on export oriented preferential policies, relies on high resource consumption and low added value, and has strongly impacted the international market with "China price". It has developed rapidly for 30 years, and has been successful in promoting China's reform and opening up for 30 years. Today, it has hit a solid wall.

This wall is precisely the ultimate challenge to the extension mode of Chinese enterprises.

According to the data released by the International Labour Organization (ILO), the per capita production value added by US workers amounted to US $63885 in the past 06 years, while under the same statistical conditions, China's per capita output value was about 9817 US dollars, about 1/7 of the other party. The gap between technology and management is the key to the difference of production rate.

Where is the way of manufacturing in China?

The choice of survival: to the left and to the right?

Are we going to the right side, continuing low wages, pegging the exchange rate to the US dollar, continuing to adhere to the long term dependence of the extension mode of growth, making low-cost manufacturing as the core competitiveness and doing the low-end "world workshop"?

Or go to the left to seek a way similar to the pformation of Korea 50 years ago, 30 years ago, Japan and 20 years ago?

Let's look at a set of figures: in 2006, China's manufacturing added value reached 10956 billion US dollars. For the first time, it surpassed Japan for the first time in total volume and became the second largest manufacturing country after the United States.

At the same time, the value-added and profit margins of China's manufacturing industry are very low, and the added value is not high.

2006 the average profit margin of the top 500 manufacturers in China was 3.61%, down 16% from the same period last year, and the average assets profit rate was 3.79%, down 14% from the same period last year.

No profit making, no matter how large it is, is weak in essence.

Not only will China's demographic dividend end in a few years, but the rise in the price of resource materials will not solve the problem of China's per capita resource poor China.

Low price and low profit, and China's manufacturing 1 era will not last long.

In order to develop China's manufacturing industry, the road of continued low cost will only become wishful thinking. It will not only be unable to maintain the existing low-end manufacturing industry, but also eventually lose the opportunity to enter the high-end market.

In response, Wang Xingshan, senior management vice president of the wave group, said: "Chinese manufacturing enterprises are facing the double challenges of industrialization and informatization.

The current situation of China's manufacturing industry is very similar to that of the early 90s in the United States.

However, the US business was forced by Japanese and German latecomers to catch up, and the Chinese enterprises are facing many pressures, such as the global economic recession, rising costs and so on.

China's manufacturing enterprises should learn from the development experience of international advanced manufacturing industry, change the traditional extension mode from the aspects of clustering, informatization and service, accelerate the integration of manufacturing and service industry, accelerate the integration of industrialization and information, take the road of new industrialization, and enhance the level of industrialization through mass customization. By implementing lean enterprise strategy, we can benefit from management so as to go out of a successful way that is suitable for the development of China's manufacturing industry.

The first page: the choice of survival: left to the right, second pages: Chinese question: the three challenge is about to start management third page:

Management 2: self pcendence mission of China's ERP