3 China Manufacturing Trend to Look Up in the Coming Year

It is expected that China will advance from being a manufacturing powerhouse to an active leader in digital innovation in the coming years. But the market experts are predicting that the core of China’s success will largely remain on its manufacturing prowess. Perhaps we should have been paying more attention to the impact of the government’s Belt and Road Initiative- the project that aims to reinvigorate China’s ancient trading paths. Take a look at the following trends that will have a maximum impact on the China business.

 

Trade Tariffs

Tariffs are border taxes charged on foreign imports. Importers pay the applicable charges at the point of entry to the customs agency of the country or economic bloc imposing them. Rather than being used to raise revenue, they are imposed to increase the price of foreign goods in order to make domestic produce comparatively cheaper, with the aim of encouraging domestic production by protecting local firms from global competition. The Trump administration has begun taxing $200 billion in Chinese goods. China lawyers are getting a huge number of phone inquiries from the US manufacturing enterprises looking at the great tariffs being imposed on their goods imported into the United States and wondering what they should do. Chinese policymakers have sought to reassure foreign businesses that their investments in the country are welcome and safe. With the economy slowing, Chinese leaders understandably want to make sure foreign capital keeps flowing.

 

China Supply Chain

It is a fact that China made products are longer cheaper as they used to be. In spite of that, this country is still the only realistic manufacturing destination for various types of goods and items. Operating conditions in Chinese factories have significantly improved over the past year. Based on future output expectations and current inventory trends, manufacturing activity is rebounding in China. As such, the world of manufacturing as opened up to small businesses and start-up companies. Policymakers are accelerating approvals for road and rail projects and are trying to reduce business costs. More cash is being pumped into the financial system to bring down lending rates, taxes are being cut and state banks are being urged to keep credit flowing to companies hit by trade tensions.

 

Advanced Manufacturing

China is today the world’s largest manufacturing economy and considered to be one of the most competitive nations in the world. China’s advanced and constantly improving manufacturing sector ecosystem, the push for automated processes, and the desire to near-source given the rising importance of the Chinese consumer – are making China’s manufacturing powerhouse even more powerful. A key part of this involves setting and enforcing consistent standards for all manufacturing facilities, with special emphasis placed on improving manufacturing techniques, quality management and brand nurturing.

 

China manufacturing remains a leader and is expected to grow 6% to 7% every year until 2025. Modularized mass customization could merge China’s capabilities in mass production with innovations required to deliver customized, differentiated products domestically and globally.

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The Growing Importance of WFOE Amidst US-China Trade War

With the growing US-China trade war and continuous slowdown in Chinese economy, US companies having business interest in China cannot afford to maintain a quasi-legal status in China. The value of forming a China specific WFOE has been stressed by the China lawyers time and again. And with the growing tension between the two countries, forming WFOE will take a greater significance.

The US has imposed three rounds of tariffs on Chinese products this year, totaling $250bn worth of goods. President Trump has warned even more could be on the way. Beijing announced it would retaliate against new US tariffs, with the commerce ministry saying that it would “immediately introduce countermeasures of the same scale and strength”.

China purchased roughly $130 billion in American goods last year — less than a third of what the United States ordered from Chinese enterprises. Now Beijing is poised to impose higher border taxes on a total of $110 billion in U.S. products. China’s $3 billion dollar counter punch to the US tariffs is just the first move from the world’s second largest economy, according to a Bloomberg report. One of the major retaliatory actions might be the cancellation of a $38 billion order to American aircraft maker Boeing, which China placed back in the year 2015. Agriculture and technology are other major sectors where the Asian superpower may plan to hit back US trade imposition.

China’s Foreign Ministry said it will respond to Trump’s latest round of tariffs with duties on more than 5,200 types of American imports and unleash a crackdown on the US companies operating in China without proper legal documents.

Beijing imposed a 25 percent additional tariff on imported American cars in response to U.S. tariffs on $34 billion in Chinese goods, including the automotive, solar panel. Electronics goods, furniture sector. US companies need to understand that the independent contractors are almost never legal in China and if US firm has Chinese employees, it must have a WFOE as a possible weapon for defending themselves from the wrath of the Chinese government.

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