IA: SMEs respond to pressures with ingenuity, new products
July 25, 2013
Whilst monitoring many platforms for new steps in China manufacturing, we came across this article written by Shi Jing and Yu Ran in Shanghai (China Daily). The article in question responds to the Chinese economic reform, in particular the gear shifting transition from a manufacturing, export driven economy to a service and consumerist economy.
A new strategy
The economic rebalancing of China is in full swing some pressures have been exerted onto the manufacturing industry. As China continues to integrate more and more of its citizens into the excess of megacities; levels of education and skilled labour rise. This has contributed to a shortage of the once abundant factory labour force, forcing factory owners to raise wages and (particularly for many SMEs) reduce already narrow profit margins. To combat this, many private sector SMEs are investing in new machinery. This initial cost however is difficult to offset and obtaining loans with reasonable interest from the banks can a mammoth task. However this is not all bad news.
As many of us have predicted, the rapidly rising GDP is creating a ripple amongst the Chinese market. The increase in disposable income, idealization of the ‘Chinese dream’ and growing appreciation for higher quality goods mean that SMEs are exploring the market to find the greatest opportunities for profit and expanding business operations. This progress has risen to change and restructuring of business plans all over to fit the demands that this succession of change requires.
Yet, despite the struggles of many SMEs, China still remains the powerhouse of the global manufacturing industry. The mechanisation of labour will facilitate its transition from the previous abundance of largely unskilled labour into the high-tech industries which will generate larger profit margins.
To see the full China Daily article please visit the following link: http://europe.chinadaily.com.cn/business/2013-07/19/content_16799085.htm (published: 2013-07-19 10:04)