China Continues to Grow Beyond Low Cost Labor 11/14/2010

A recent article I found online discusses a very important topic: China moving beyond just a source of cheap goods and low cost labor.  Despite what you may have heard and read, China has become a very advanced economy from what it once was.  Many international firms like GE, Motorola, and General Motors have invested significantly to develop large research and development centers throughout China.  The article discusses a recent survey conducted by KPMG which shows a growing interest among global manufacturers to leverage the large pool of skilled engineers and other highly trained individuals to increase the amount of “value-add” activities that there businesses are conducting in the region.

I’ve inserted a brief form the article below:

“China and India have become more than just centers for low-cost manufacturing for some global companies. The survey showed that a significant percentage of global manufacturers are willing to source research and development and the manufacturing of goods where important intellectual property is involved has increased to 29 and 33 percent, respectively.

‘If you would have looked at the survey three years ago, it would have been zero percent…no one would have ever done product innovation or R&D in India or China. Many really sophisticated companies are saying they’ll make it in China if they’re selling it in China.'”

I actually don’t subscribe to the theory that three years ago none of these global manufacturers were eyeing China as a potential R&D destinations – 5 years ago I was working inside GE’s medical R&D center in Wuxi, just outside of Shanghai on a number of different projects that had been underway for quite some time.  What I do support however, is the notion that most manufacturers are only recently beginning to view China as a potential destination for R&D investment.  Especially as more and more companies are eyeing the Chinese domestic market for their goods.  Local R&D will benefit these companies in many ways, especially when it come to modiyfing existing designs to suit Chinese market demands and applications.

I’d love to hear more of your thoughts on this…please feel free to share!

Reply