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