China, the world’s second largest economy and the manufacturing heartland of the world, offers many opportunities for businesses around the globe. But what are the benefits of doing business in China? Here are few clues to help you weigh up a decision to move your business to the Middle Kingdom.
If you manufacture products it’s always been true that you can make them in China for less money than in pretty much all of the developing world. While wages in the country have been increasing for the last few years you can still employ relatively skilled labour for around $200-300 US dollars a month and as the bulk of costs in most production areas will be dramatically offset by low cost labour.
With millions of unemployed in the country, the Chinese government and provincial authorities are often willing to subsidise market entry for foreign companies that are willing to form joint-venture partnerships. This is particularly true in areas that have been earmarked for economic development such as the Chongqing/Chengdu industrial zone where over 40,000 square kilometres have been singled out for massive industrialisation.
High Skill Base
The Chinese have not wasted the thirty years available to them since the market opened up, the country has invested heavily in education and qualified engineers and scientists are available in large numbers. This means that salaries for even highly skilled workers are still relatively low because of the volumes of university graduates entering the workforce every year.
China offers a wealth of experience for manufacturing that is not commonly found elsewhere in the developing world. The country is already making pretty much everything that can be made, excluding in a few very high technology sectors, and that means it’s easy to find a company and China manufacturing agent with the right expertise to deliver what your customers need.
The business in environment in China is geared to taking advantage of an export driven economy and while it’s not all plain sailing and bureaucracy can occasionally be stifling, it is a supportive environment for those companies willing to take their time and integrate properly with the domestic corporate culture.
Chinese manufacturing generally doesn’t bring high margins for the producers; ruthless competition ensures that production margins remain low. That means exporters retain most of the profit for their own domestic markets, which makes doing business in China a very attractive prospect indeed.