China’s Development and the Effects on Sourcing in China

China is the fastest developing major country in the world today and there does not appear to be any slowdown in sight.  How does this affect your China sourcing, you ask?  For starters, the booming economy can create new opportunities for the savvy importer.  Sourcing in China becomes more attractive to importers as China becomes more and more sophisticated and versatile in terms of manufacturing because of this growth.  Here are some of the changes that impact importers:

• More affluent market = more consumer products manufactured for them. China’s middle class will take a giant leap from around 100 million, currently to about 700 million people in 2020.  This growing consumer society requires a lot of consumer good, and demands better and better quality.  This generally translates into greater variety and lower MOQs for those sourcing in China.
• More cars = more automotive factories that make more sophisticated and better quality products. With the influx of China’s more affluent consumer, the number of people that own private cars is growing rapidly, as well.  It is growing from about 10 million in the early 21^st century to a predicted 130 million by 2020.  The automotive industry is a key modernization driver of China’s industry.
• More cars = more highways, better transport, better logistics. Due to the major increase in cars, there has been a tremendous amount of upgrading and adding of new highways to keep up the pace and spur the economy of far-flung locations.   They are spending billions of dollars to upgrade their railways as well.  They are building high-speed intercity links that will cut travel time in half for those who travel by rail.  For importers sourcing in China who regularly travel to China for business, this dynamic means easier access to new, geographically distant suppliers who now have better and cheaper access to ports, it also makes it easier to get around to attend trade shows, visit factories, etc.
• Better transport = new, further factories. With all China’s growth and development, factories overhead on the Eastern seaboard has grown as well.  A lot of this is due to the increase in labor costs because the cost of living has gone up.  As a result, many reputable factories are looking further afield and are re-locating to China’s hinterland where labor is abundant and cheap.  A process made easier and more cost effective by the above transport initiatives.

The changes caused by China’s development can be subtle but they are inevitable and they affect all industries.  Have you noticed them in your business?  Have you taken advantage of these trends to reduce your costs and increase your product range? How do you keep your costs down and your quality up in this fast-growing economy?  I would love to see your comments on this topic.

 

By Susan Timpe