China , “The World’s Factory”. Is Still The World’s Factory.- hemanthtec

 

China , “The World’s Factory”. 

When I was a child the first toy car I bought was a “made in China” product. Not only that toy car, maximum all the goods that present in India like mobiles, gadgets, electronics, etc. all have the “made in China” tag.

For many of us has a doubt why every product is from China, not from any country like U.S, Germany, Japan.  Not even from India.

These “made in China” products got that craze why because many goddam companies are present in China and presenting there goods for low cost.

 

Why so many goods are from China?

We all thought that the goods  which are from China have low production cost, the labour charges are less ,blaw, blaw , blaw.

All those are correct, along with those there are some additional things like strong business ecosystem , low tax duties, no regulatory compliances and cost of currency .

All these are discussed in this article

 

Labours and there wages :

We all know the population in China is approx..140 crore, which is the largest populated country in the world.

 As the population is more the law of supply and demand comes into play. The supply of labour is more than the demanded labour.

As a result people has to work for low wages inorder to get food. This is the main advantage of many companies to choose China .

Many people in China are from rural and undeveloped places, so that they don’t have any educational qualification . so that the children of them are also go to work along with parents.

This results in the major growth in child labour, which is very illegal. China takes many regulations on child labours but failed in many cases.

Some facts about child labours in China.

About 7.74% of child labours are in between 10-15 although legal age is 16 in China.

Positivity rate in school dropouts is more year by year.

Migrant workers are major reason for child labour.

There is a fine of about 5000 yuan for the factory which supports child labour.

Around 160 million child labour present in China as of 2021.

 

Lower compliances :

As there is more competition for work , the companies take this as advantage lower the wages of the labour.

 The labour don’t rise there voice against any company why because if they lost the job there are many people who are waiting for that opportunity. So that they do work without any compliance so that the companies spend less wages to labour.

Some factories pay the wages to labour on year on year bases so that they keep the labour for long time,so that there stability increases.

 

Taxes and duties:

The export tax rebate policy was initiated in the year 1985 by China was the game changing step for the China.

That policy says that there is no tax on the good that are exported from there country so that it attracts many investors to come to China and buy the goods and export to the necessary places where they needed.

So that the sellers in China got an opportunity to sell there goods with profits.

This is the main reason the products from China costs less as there is no export charges so that the cost of the product also reduces.

 

Currency depression :

Compared to other countries China has less taxes , regulation barriers so that the value of currency of the China is depressing so that it stands as a competition to U.S.

According to currency market as of July, 2021. The Chinese currency, Yuan is under valued by 12.5% against dollar which is the currency of U.S.

 

Is China still the world’s factory :

Coming to interesting part in this article , we can clearly say that China is loosing there potentials in the world’s factory market.

Many studies says that China is going to loose many factories at an astonishing pace in another 5 years of time.

Already 20 – 30% of factories left China country during this pandemic times , we all know why it happened.

Trust and reputation travels faster than words where as  mistrust travels more than air.

Means trust and reputations takes years to build , but mistrust takes a few moments to destroy that trust.

The loosing of factories is because of many reasons such as geopolitical tensions , covid-19 impact, child labour, high tariffs, misusing WTO(World Trade Organisation) rules, etc ..

China also has ongoing conflicts with India Australia, Japan and not necessary to say U.S. Many countries and factories are developing there own products without depending on Chinese products by a slogan called “Anti-China”.

Let me tell you a case study about Samsung factory. Samsung is one of the popular tech companies in the world. It has plants all over the world including China.

Now Samsung closes its last factory in China and opens new factories at Vietnam and India . the one which is in India is the biggest plant than Vietnam .

This provides us an idea that India is entering into the world’s factory list and going further for better future.