(Chinese Version)

During the past four decades,Chinahas always been on the low end of international division of labor and earned a reputation as “world’s factory”. In this “factory”, everything seems to be made inChina, whether it is a phone, computer, a Barbie doll, or a Santa Claus, a pair of NIKE’s shoes…. There is even a joke that goes like “as long as you can design a product,Chinacan manufacture it”.

In the past four decades, manufacturing industry boomed inChina. Many companies chose to have their products produced inChinabecause of the low labor cost, making manufacturing industry a pillar industry ofChina’s national economy. To some extent, manufacturing industry has already become a symbol ofChina, and every change in this industry will bring about major social changes inChina. A Chinese entrepreneur even said that you could never truly understandChinawithout understanding Chinese manufacturing industry.

However,China’s manufacturing industry is having a tough time in the face of ever-changing technology and society and is forced to transform itself. After Spring Festival in 2015, a number of factories inJiangsuprovince, including well-known factories such as Shenghua Technology, were closed. An owner of a smart phone contract factory in Dongguan even attempted to commit a suicide since his factory couldn’t avoid the same fate. One can tell the suffering ofChina’s manufacturing industry.

After the Spring Festival, there was a mass capital withdrawal of overseas enterprises in many coastal cities inChina. Consequently, a large number of migrant workers were fired. In fact, big contract manufacturers such as Samsung and FOXCONN have already started to move their factories to cheaper locales in Southeast Asia, whileChina’s manufacturing industry fails to modify its structure in time for this change accordingly.

Chinese manufacturing industry is having a tough time

As I have mentioned above, manufacturing industry has always been a pillar industry of Chinese economy. Since there is no special requirement set for factory workers and there’s a huge demand for them, millions of job opportunities exist in manufacturing industry. That’s why many vocational schools dare to guarantee that they can assign jobs for their graduates.

It could be really hard to imagine how China could manage to have over 5 million college graduates employed every year, especially when most college students only do two things in college: playing computer games and falling in love. However,China’s manufacturing industry makes it possible.

Low requirements means lower income. To earn more, workers in these contract factories have to work extra hours. Here comes a vicious cycle: they expect to earn more money so as to make their life better and live more comfortably, but the reality is that they don’t have time for their own life since they are occupied with their work.

That’s why many workers can’t stay long in a factory. Unstable work force has already become a huge headache for many factory owners, let alone the withdrawal of overseas enterprises.

During the past decade, real estate industry boomed and along with other virtual economy businesses, attracting large quantity of capital. While companies in real estate industry don’t have to worry much about customers, quality and innovation but still have a revenue rate of 35%, factories in manufacturing industry have to invest a large amount of money beforehand to cover all kinds of cost and meet the needs of overseas customers, yet still have a much lower revenue rate.

That’s why many manufacturers entered real estate industry to look for a share of this market. For example, both Haier and Konka have once carried out their own buildings. Were it not for Guo Taiming (CEO of FOXCONN)’s promise that FOXCONN would never enter real estate industry, FOXCOON would surely do the same thing as Haier and Konka. Although Chinese government has tried to drive central state-owned enterprises and big companies out of the real estate industry, investors have already withdrawn fromChina’s manufacturing industry and the once promising industry is now really having a tough time.

In today’sChina, many young Chinese people take Steve Jobs and Jack Ma as their idols and most college students prefer to major in subjects such as finance, electronics, communication and computer science inChina, but few dares to major in subjects such as machinery. However, whatChinareally needs right now are actually technicians.

WhenChina’s manufacturing industry is having a tough time, Chinese economy also suffered. A nation where all young people prefer to work as a real estate salesperson, a master on achieving success or a second-class star has no future.

The end of fake products?

Chinais acknowledged to be the number one manufacturer around the world. However, Chinese products do not have a decent image. Rather, there remains a huge gap betweenChinaand developed countries. As China is opening up to the world and increasingly conducting trade with other countries, the newly-rich in China seem to prefer foreign products, such as toilet seats made in Japan and clothes, bags, watches and cosmetics made in Europe and the US. Chinese manufacturers have got to really think hard and find out the reason why consumers prefer foreign products, and learn from foreign brands’ marketing strategy, etc.

Forgery is common among Chinese products. This phenomenon has to do not only with technology, commercial interests, but also Chinese culture and human nature. More broadly, forgery is common in every layer of Chinese society nowadays.

During the past four decades,Chinamanufactured more than 90% of fake products around the world in total. As one of the third world countries for a long time,Chinalacked advance technology and innovation culture. In this case, many manufacturers have to manufacture their products through imitation. Chinese manufacturers seem to be really good at imitating and can manufacturer all kinds of products, from advanced products such as airplanes to ordinary products such as clothes. It happens that the world is also in need of these fake products. There is even a joke that goes like “no products can’t be copied and made inChina”.

In conclusion, the prevalent forgery in Chinese products results from both the strong ability to imitate and manufacture whatever products, and the lack of awareness of high quality life. A person that can bear gutter oil and melamine is also okay with fake products.

For a while, fake luxury goods have been popular inChina. At that time, a consumer can buy a “high quality” fake Rolex watch for 25 RMB, a Prada’s handbag for 32 RMB and an iPhone 6 Plus for 399 RMB. Both the consumers and the sellers knew that these products were knockoffs, but some consumer would still ask the sellers if their products were authentic. What a shame.

To sum up, forgery has become a great headache for Chinese manufacturers. However, I have confidence that fake products will soon be driven out of the market with the rise of living standard and awareness of a better life among Chinese people, and also with stricter government regulations.

When can Chinese manufacturers adapt themselves to Industry 4.0?

These years,China’s social change has also contributed to the downfall of traditional manufacturing industry. Some young people look forward to working in the state-owned enterprises and have an easier life, others prefer to open a small startup such as running a coffee shop and live a simple life, while only a few young people dare to enter manufacturing industry and stick to it for the rest of their life.

Since fewer young people are willing to work at the assembly line, the labor cost increases a lot nowadays. For example, the basic monthly salary for an ordinary worker in FOXCONN has increased from 700 RMB five years ago to 2100 RMB today, which forces FOXCONN to move its factories to inland cities inChinasuch asZhengzhou,Chengdu, other countries in Southeast Asia such asVietnam, and even African countries, where labor remains cheap.

However, this method can only improve the situation temporarily. To fully solve the problem, Chinese manufacturers have to develop the most advanced technologies such as automatic assembly line and 3D printing, etc. In other words, Chinese manufacturers have to adapt themselves to Industry 4.0.

While forgery remains prevalent in Chinese products, we should also notice the progress in Chinese manufacturing industry. For example, Apple owes a lot to FOXCONN for its professionalism and efficiency when manufacturing iPhones.

Moreover, many Chinese contract manufacturers for cars come up with various methods to test a car’s performance in order to build a safe and perfect car. All these efforts should be praised and seen as Chinese manufacturers’ efforts to transform themselves.

However, we should also be aware of the weaknesses:

Above all, Chinese manufacturers are lacking in innovation. To tackle this problem, Chinese manufacturers should begin to adopt automatic assembly line and free workers from the traditional assembly lines. Chinese government should also carry out policies and set up funds to help Chinese manufacturers turn their assembly line automatic. Moreover, innovation should be always encouraged.

Secondly, Chinese manufacturers should adapt themselves to the Internet era as quickly as possible and fully utilize the latest technologies such as 3D printing and big data when manufacturing new products. Otherwise, Chinese manufacturers will again lag behind the world.

It should be held as a common concern how Chinese manufacturers can adapt themselves to Industry 4.0. Chinese manufacturers should be eager to make innovation while at the same time create enough job opportunities. To some extent, the healthy development of Chinese society lies in the steady development of manufacturing industry. At last, I’d like to say that: Good luck, Chinese manufacturing industry.

[The article is published and edited with authorization from the author @Constantine, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.