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07/11/2014

Study: For Manufacturing of Low-Value Goods, China's "Heyday" May Be Over

As reported by the Shipping Gazette, a recent study suggests that China's position as "the factory of the world" is beginning to erode.  After two decades of providing low-cost goods to consumers in Europe and North America, propelling it to the world's second largest economy, China's growth rate is slowing. Researchers examined whether the country could be losing market share to competitors in Southeast Asia such as Vietnam, Cambodia and Thailand.  "According to a recent paper by BCA Research, China is in no danger of losing its market share in low-cost manufacturing and exports. Nevertheless, the group seems to believe that the heyday, in terms of growth in this area, is now over."

 

One contributing factor cited in the study is that the level of value-added services offered by China's manufacturing sector "ranks rather low," falling behind other emerging economies such as Brazil, Turkey and Mexico. On a positive note, China investment in Research and Development (R&D), which could lead the nation away from reliance on low-cost manufacturing, now accounts for almost 2% of overall GDP.

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