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China's Manufacturing Industry and Executive Opportunities

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"China also has moved away from its original status of purely producing basic, what you call, consumer commodities and Chinese companies are moving beyond China to various parts of the world." -Sellapan Ramanathan, President of the Republic of Singapore

China is renowned for its manufacturing industry. When thinking of products produced in China, many of us automatically envision clothing, children’s toys, consumer electronics and virtually all other items. The association many of us attach to Chinese manufactured products is quantity over quality. However, in recent years China appears to be diversifying out of this market and out of this stereotype. "China’s hourly manufacturing labor rates are far below rates in Japan ($27.80) and Taiwan ($8.68) but roughly on par with nations like the Philippines ($1.68). China manufacturing compensation costs are slightly higher than those in India. Many EMS / ODM companies in China, especially those making PCs, are moving operations inland" (2011 Report on China Manufacturing Hourly Rate). Subsequently this report shows that China has steadily increased its average wage for workers, and that China pays its workers statistically more than countries such as India. The average wages are much lower than other Asian countries, such as Japan, but of course the two countries operate and appeal to different markets with their consumer goods.

According to a report produced by Deloitte, "based on the overall development of the manufacturing industry, 53% of the interviewees believed that the China manufacturing industry was in an absolute advantageous position in Asia. However, when focusing on different individual factors, interviewees' ratings vary substantially from county to country, which fully reflected the different positioning of these countries in the global value chain. The report summarized that besides having sufficient labor resources to cope with the structural transformation, other major forces driving the China manufacturing industry include infrastructure quality, continuous and systematic support from the government on technology research, and vibrant business environment" (Deloitte Report). The report suggests that China’s is strong due to the workforce it has, and the government’s support of this sector. The industry itself provides billions for the Chinese economy. One could argue that the strength of the Chinese manufacturing industry is what has made China the economic super power that it is today.

However, although statistics show that there are no shortages in the general labor force; shortages in expertise in some of the manufacturing industries for executive talent have become evident. The Bloomberg Report for 2012 suggests that India has experienced its fastest growth in eight months, where as China’s growth is slowing somewhat.The shortage of talent which is emerging, coupled with a slowing in growth, could produce a change in approach from many of the job markets, not just the manufacturing sector in China.

Overall, it remains certain that China’s manufacturing industry will continue to grow. The possibilities in this sector for well-educated executives from and based in China will continue to increase, as demands on the industry increase. Conversely, what is interesting is that we may also continue to see an increase in expatriate executives in China in a varying number of positions, like we are seeing in many other Asia Pacific nations.

The AESC has member executive search firms located throughout China, all with access to your BlueSteps career profile and CV.

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This article was written by Helen Langley of the Association of Executive Search Consultants (AESC).

 
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