U.S. Enterprises Retreat to Return to Domestic Manufacturing Industry Needs to Transform to High-end Industry

According to the Voice of Economy “YangGuang Finance Review”, the Boston Consulting Group released a report a few days ago. According to this report, the cost advantage made by the United States is now becoming increasingly apparent. In the next five years, the United States will add 2 million to the US With 3 million jobs, China is rapidly increasing salaries and the U.S. labor productivity is four times that of China. According to the current situation, the manufacturing industries that are most likely to return to the United States include transportation vehicles, electronic equipment and devices, furniture, plastics, rubber products, machinery, metal products, and computers. These types of goods account for nearly 70% of U.S. imports from China.

Made in China has almost become China's label, but it seems that there have been some changes in the situation suddenly, and the US manufacturing is now regaining confidence. How do you see some of the US companies relocating? In addition, the reporter learned that the return of U.S. companies is an economic consideration. Is the U.S. manufacturing cost lower than China's? In response to this, Ye Chen, a famous commentator on the economy, commented.

Ye Tan: It is indeed a phenomenon that U.S. companies have returned to their homeland, but it has not been as exaggerated as the report said. Even if China's wage costs rise, only the US’s labor cost from 4% in the United States to 10% will not be a particularly large number. In addition, only some products produced by the United States are returned, such as some companies that match the United States’ computers or high-tech industries. After all, the United States has advantages in high-end manufacturing industries, and the United States’ labor productivity is China’s. Four times.

Due to the vigorous promotion of the U.S. government, from this period of time, not only the global raw material prices have risen, labor costs have risen, and the U.S. dollar index has risen. This has led to some manufacturing operations in other countries that appear to be unprofitable, especially if China’s renminbi exchange rate has risen. It will become unprofitable to continue doing some low-end manufacturing.

The problem facing the country is the withdrawal of enterprises. Some enterprises have shifted the production sector from China to countries with lower labor costs, such as Vietnam. Will this evacuation trend have a fatal blow to China's manufacturing industry?

Ye Tan: This is what China must be especially vigilant. We must be vigilant in two aspects. High-end manufacturing flows back to the United States. At the same time, mid-to-low-end manufacturing pursues lower costs to China's neighboring countries. To be prepared to guard against these problems, the first domestic industrial chain must be further improved; second, manufacturing must be done from the low to the high end; and the third is to maintain the stability of the export market in China.

China’s positioning in the global industrial division of labor is still a manufacturer, not a designer, and the country has always wanted to change this situation. However, at present, China's technological innovation capability or ability to transform is insufficient. How do you view the current reality?

Ye Tan: At present, the overall profitability of the domestic real economy is not high. It is very important for China's transition from the low-end to the high-end during the transition of the real economy. China's manufacturing further advances to the high-end, but the perfection of manufacturing is the perfection of China's standardized manufacturing. This is the most important.