China and Global Manufacturing

China’s Manufacturing Activity Picks Up

“China’s official manufacturing purchasing managers’ index rose to 52.4 in September, a five-year-high”

While manufacturing in China remains strong, in recent years, low-wage production has been shifting away from China. Vietnam, Cambodia, and Indonesia have become manufacturing hubs for garments, shoes, and other mass-produced goods. Large corporations often find the cheapest supply-chain options.

China would like to move up the *production value chain *and become a hub for high-skill manufacturing, robotics, and autonomous vehicles. The shift from low wage to higher skill production happens when an economy matures.

But Chinese leaders, especially political leaders, do not want to displace low-skill jobs. The right mix of incentives will allow large manufacturers to stay in China rather than move their operations elsewhere.

At the same time, advanced manufacturing is an important macroeconomic trend, especially the United States and Germany. With advanced technologies and materials, manufacturers can eliminate much of their supply chain; customize small-batch orders; and on-shore or localize production.

Advanced manufacturing is not yet at scale — Nike cannot produce an adequate number of sneakers with on-site 3-d printers — but interesting production trends are starting to emerge within the global startup community.