Everything Was Made in China - December 13, 2015

Everything Was Made in China

Made in China – that is probably the three most used English words in the World, but will this be the case forever? People are so used to say that something was made in China, sometimes they are surprised to find out that the thing they are holding was not produced there. We should get used to this since manufacturing seems to be changing.

As Business Insider reported as “China is facing an economic slowdown amid a government-sponsored shift towards the service sector and away from manufacturing, the "Made in China" story is falling apart”. The journal also states that “Mexico and Brazil become more attractive for global manufacturers”.

There are reasons for this. Mexican and Brazilian manufacturing prices are constantly falling and they are getting closer and closer to the rising prices of their Chinese counterpart. If the trends don’t change soon they may be even cheaper. If that happens, companies will probably move their manufacturing to these countries.

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But it’s not only about the price of labour, as China also changes deep down. As we stated it last week in our blog post about the richest countries and citizens, China is taking over the 1st place in several important statistics. China has now the most billionaires in the world: they have 596, while the second country, the US has “only” 537. But there is an even more important figure: the East Asian country has the biggest middle class, counting 109 million adults, while the US has 92 million. This leads to changes in the economy in several ways, for example the growing consumption of citizens. This fast paced growth is not expected to change in the near future.

There are other trends that are changing the “Made in China” story as well. Several US companies are bringing back their manufacturing from China. As MarketWatch reported earlier this year, in 2014 “sixty thousand manufacturing jobs were added in the U.S.”, while in 2003 there were only 12 thousand. There may be economical reasons for this, but not solely. For example Apple probably relocated the manufacturing for their most high-end product, Mac Pro to the US for marketing reasons.

Altogether, China’s lead will not evaporate in days, but the trends are changing. In the meantime, the leaders of the world’s largest manufacturing country don’t seem to worry about this change, on the contrary, they still prefer the service sector.