Manufacturing companies in the world’s second-largest economy are now faced with urgent needs to find a way out with industrial upgrading. China, the eastern world giant, has been enacting as the so-called world factory during the past several decades. Industrial goods and equipment are exported from the eastern land to most of the regions and countries worldwide. However, growing economy in Southeast Asia is taking over the role of China in the world supply chain, witnessed by trade data recent year from and toward Vietnam. China’s past labor-intensive mode of manufacturing business is no longer a key to its economic growth given the factors nowadays.
Zixin Yuan, digital marketing coordinator from ELITER Packaging Machinery, talks about the current situations in China’s packaging machinery industry and envision the future of made-in-China packaging automation solutions.
Homogeneity that intensifies competition
The fact that industrial goods made in China are, generally speaking, primarily basic products in terms of functions, quality, and there is lack of patent and unique technology, makes it inevitable that the barriers to entry do no exist. New players constantly flock into the market expecting to take a portion of the market. Gradually there are more and more suppliers in the market offering products with almost the same features, a outcome that intensifies the competition.
Price war – the start of a negative circle
In order to keep their market status, have no choice to make a difference but to take avail of their edge over new players in terms of experience and sources, scale of economy, thus, to keep a curb on the cost so that products sold by them are more competitive regarding the price. The strategy may probably work fine in the very outset, however, in the long term, companies will keep seeking ways to further cut down the cost and, without any doubt, products are made with each time more inferior quality.
Collapse in revenue that hinders innovation
As market players joining the game of price, no matter they are willing to or not, it is inevitable that revenue goes down as they keep on offering inferior industrial goods. Even if a company has noticed of the unsustainable circle and the way to stand out from the competition is the innovation and upgrading, struggling to survive the competition is already a tough task not even to mention improving the financial status to invest more in innovation.
“I hope companies have found that they are launching a game in which nobody wins.”, said Zixin. “We prefer to define companies which are keen on this insane loop as redundant productivity in the industrial and are to be ruled out once the industrial upgrading is achieved. Yet we are not sure when it will come.”
About the Author
Zixin Yuan – Digital Marketing Coordinator at ELITER Packaging Machinery
Contact: [email protected]
Zixin Yuan is a junior digital marketing coordinator who worked for Hyundai Merchant Marine, which is a container liner, before she took job hopping to the packaging machinery industry and joined ELITER Packaging Machinery – manufacturer of automatic cartoning machines, overwrapping machines and wrap-around sleever. Her interest lies in topics about international trade, supply chain, analysis of Chinese local market and economy.