Reconsidering “MADE IN CHINA”
What’s the first thought that comes to mind when you see a shirt or a bag with a “MADE IN CHINA” tag? Probably what everyone else thinks: cheap, disposable, and so, money ill-spent. China’s reputation as the global center of low-end manufacturing is hardly unfounded of course. In 2010, due to a decades-long combination of rock-bottom wages, generous government subsidies and export-favoring exchange rates, China surpassed the U.S. to become the largest manufacturing economy in the world. Low-value goods such as apparel and appliances make up China’s manufacturing base.
Increasingly, however, Chinese goods are cheaper because Chinese companies are leveraging innovative technologies and economies of scale to churn out textiles and furniture as well as solar panels and semiconductors at less than half the price of their competitors abroad. Increasingly, in other words, Chinese goods are dominating the global market because they deliver the best quality at a lower cost. This is the case whether you’re looking at labor-intensive or knowledge-intensive industries.
One way to understand this about-face is to look at what consumers are demanding in China itself. As the Chinese middle-class continues to balloon, the composition of the domestic economy is shifting to meet middle-class desires for clothes, cars and tech goods that match both the style and quality of products made abroad. Advanced industries in China are thus growing at a formidable clip, so much so that as early as 2007, China had already exceeded the U.S. in technological capability. Chinese labor remains cheap relative to industrialized nation wages but, again, this is not because Chinese labor is overwhelmingly unskilled. Innovation and automation keep labor costs low. The long-term trend is, in fact, rising wages alongside high-value production.
Another way to make sense of China’s new manufacturing paradigm is to delve a little into the history of high-end Chinese manufacturing. For millennia, the Middle Kingdom exported widely-prized, artisan-based goods such as embroidered silk textiles and wood and ivory carvings. The skill of Chinese ivory carving has been unparalleled since Asiatic elephants began roaming the Yangtze River region in 1600 B.C., for instance, providing a ready supply of raw material for craftspeople. Exquisite ivory amulets and hairpins were common trade items along the Silk Road, which arose in response to foreign demand for Chinese silk no less. Silk production was a fiercely guarded secret in China. The Chinese held a monopoly on sericulture until 200 B.C., whereupon it spread to Persia, and later, in 550 A.D., to Europe. China was also the first country to develop cultured pearls in 1080 A.D., a discovery borne from a long tradition of pearl harvesting. Today, China produces 96% of the world’s pearls, from those of costume-jewelry quality to lustrous orbs that rival Tahiti’s finest.
The sophisticated production techniques pioneered in the contemporary Chinese pearl industry illustrate the way ancient traditions, on the one hand, and modern tools and sensibilities, on the other, can yield stunning commercial success without sacrificing quality. While this happy marriage is not yet the case across all sectors of Chinese manufacturing, it does challenge the automatic assumption that “MADE IN CHINA” means poorly made. “There is a myth that the U.S. would remain the knowledge economy and China the sweatshop,” observes Jim Hemerling of the Boston Consulting Group. More and more, he continues, “this is no longer the case.”
Industry analysts agree that China is quickly moving beyond low-wage jobs and imitating foreign producers toward a position of technological prowess, increased worker productivity, and so, higher wages. State-of-the-art production facilities and upmarket goods are finally beginning to yield better working conditions and compensation. But the road to fair labor is still long and winding. Reforms prompted by the 2010 worker suicides at manufacturing giant Foxconn’s Longhua campus in Shenzhen include higher minimum wages and shorter working hours, yet compliance is uneven and companies are adept at deflecting problems onto contractors and subcontractors. Inadequate labor safeguards present a serious, abiding hazard: watchdog organizations such as the China Labor Support network estimate that over a quarter of the Chinese workforce stands at risk of occupational poisoning. And once workers are sick or injured, local governments and private companies are known to collude against those seeking access to healthcare.
The idea of high-end manufacturing involves skillfully crafted as well as fairly made goods. China’s steady progress in delivering ever sleeker and savvier merchandise must be matched by improved labor standards if it hopes to establish itself as a true leader in the global economy. Only then will “MADE IN CHINA” represent well-made in both senses of the term.