Chicken fight or trade war?

rohit — Sat, 06 Feb 2010 11:03:40 +0000

In an answer to US imposing restrictions to import of Chinese tires, China has imposed anti-dumping duties of around 100% on imports of broiler chicken from US. China is the biggest importer of chicken products from US and with this move the American companies would be hit hard. In 2008 China imported more than 500 thousand tonnes of chicken products from US alone.
This may be an indication of a trade war between the two superpowers of the world. Earlier China also questioned US on its support to Taiwan by supplying arms. US has also levied anti-dumping duties on drilling pipes, wire decking and electric blankets imported from China. China being the manufacturing hub of the world seems to be facing the toughest times of the recent financial crisis.

Rogues

Series 3: Where is China heading?

rohit — Tue, 06 Oct 2009 20:17:43 +0000

China has attracted $853 billion FDI in last 30 years, which is the highest among the emerging nations. China’s manufacturing industry ranks 4th in the world. More than 50% of china’s fiscal revenues come from this sector. Most of the PCs and Laptops manufactured in the world are from China.

what is manufacturing?

It is value addition to the various raw materials like ores, chemicals, wood etc. Mechanical and chemical operaions like segregation, reaction and size reduction are some of the important operaitions which add value to raw materials. This large scale value addition to the raw materials is termed as manufacturing.

why china is the leader in manufacturing?

Raw material+Utilities+Manpower+Technology = Finished Product

China has the largest and the cheapest manpower in the world. The cost of utilities are still the cheapest in this country. Another factor is automation, which leads to low manufacturing costs.Though this has not reached the levels of a developed country, the cheap manpower and other abundant natural resouces of China makes the overall manufacturing cheaper. China may not be the leader in technologies but world’s technology leaders like Intel outsource most of their manufacturing to this country. Taiwan Semiconductors of Taiwan, worlds largest independent semiconductor manufacturer, gets most of the production done in China. To remain competitive, the best and the largest companies of the world have knocked the doors of China for manufacturing. 50% of world cameras, 30% airconditioners and 25% of the washing machines are made in China. 70% of the metallic lighters sold in the world are made in the city of Wenzhou, China. No wonder China is the manufacturing hub of the world.

So What?

Most of the developed countries like US and UK are facing increased trade deficits of more than 5% after decades, thanks to the sustainable competitive advantage of Chinese manufacturing companies. Most of the companies have made it the rule of the thumb that manufacturing can be cheap only in china. This change in the strategies of outsourcing have increased the bargaining power of China as a whole. Now China has earned the power to negotiate with the most powerful economies of the world, not with weapons but with supply of goods. China has gained what weapons of US could not!

Rogues

Golmuri » taiwan

Chicken fight or trade war?

Series 3: Where is China heading?