September 2011 Archives

Chinese Manufacturers and Incremental Innovation

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Chinese Manufacturers Export Market Share.jpg
Lower value added goods such as textiles are becoming less competitive to source from China, and Vietnam, India, and Bangladesh are just some of the countries picking up the slack in the supply of goods at the lowest rungs of the value chain. As evidenced in the chart above, China’s manufacturers are becoming more competitive in product categories ranging from electrical switching apparatuses to cruise ships, cargo ships and barges. For some product categories on the chart above, it shouldn’t come as a big surprise. Take motorcycles for instance; although commuters’ adoption of cars in China’s first-tier cities are well documented, an overwhelming majority of the population covet motorcycles as a convenient, efficient and cost effective means of transportation in China’s megacities and up and coming second- and third-tier cities.

In this cycle, China’s manufacturers are earning a sound reputation for being “extremely efficient at creating new versions, often simpler, cheaper and more efficient, of technologies and products shortly after they are invented and marketed elsewhere in the world,” according to Dan Breznitz, co-author of a newly released book titled, ‘Run of the Red Queen’. The authors further argue China should focus on what it does best: making incremental innovations in everything from manufacturing to logistics. In other words, the millions of US dollars Chinese enterprises under guidance from the central government spend on R&D, in an effort to come up with breakthrough technologies that will put them on par with the West, is money better spent elsewhere. A healthy portion of investment should be allocated to the sectors shown above where Chinese manufacturers have taken on significant shares over the past three years. In doing so, consumers both at home and abroad stand to benefit, along with merchants and sourcing managers who are able to identify the most competitive products Chinese manufacturers are producing.

TCA SEP 2011 Cover.jpgThe Beijing Axis has just released the new edition of The China Analyst, and this September 2011 edition focuses on the impact of China's business in the wider world, but especially the momentous impact on the developing world, which we describe as a new era that China is building in regions like Africa and Latin America. 

With this new edition we have also launched a dedicated website for The China Analyst, where all the sections can be read online in an interactive format. The new website can be found at www.thebeijingaxis.com/tca.

To download the new edition, please click on the link below or go to the The China Analyst website URL provide above. 

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