China is known as the World’s Manufacturing Center for the past 30 years. Since 1990, the electrical industry had been developing fast in the Pearl River Delta region. Other than that, another booming region is the Yangtze River Delta region for their mechanical industry. During then, China was an attractive place for MNCs due to the low labour cost, huge market potential and government’s tax policy to support foreign businesses.
This article is written by Coco Li - Director, Suzhou. She has over 16 years of experience in recruitment, 8 years in MNCs and 8 years in top headhunting companies.
What has changed since then?
The market landscape in China has changed tremendously in recent years building up to 2019. Labour cost has been rising year by year, at times, it’s even higher than in US. Government policies have shifted to support local companies instead of MNCs. Local China companies, with the strong support from the government, are becoming more competitive. All these factors put a lot of pressure on the MNCs who once thrived in China.
Many MNCs moved to South East Asia
Many of these MNCs closed, sell or relocated their manufacturing plants to lower cost regions such as South East Asia. This is especially so for low margin industries such as E&E, OEM, Molding and Consumer Durables.
Rise of Technology-Intensive Industries
Meanwhile, the government is currently motivating technology-intensive industries such as Pharmaceutical, Semi-Conductor, New Energy, Automation and Internet Plus. Due to this, many professionals with an extensive knowledge and experience in technology are returning to China. With capital from investors and support from government, many companies enjoyed a boost in their growth and in return contribute new technology, products, employment opportunities and also tax to China. In addition to that, R&D talents will also be well sought after from those industries as well.
Low Consumption Rate
Even though China’s economy has been booming in the last few years, consumers’ buying habits and consumption rate seems to be coming to a plateau. Many manufacturing companies are finding it difficult to get orders and sell their products. This is similar to the decline in sales for the Automotive industry where most family now already have cars and the road are already crowded. The slowdown in the manufacturing has also resulted in a lack of job opportunities and development for many talents. Many middle level professionals are leaving the manufacturing industry to join the service industry such as insurance and sales. Talents in the automotive industry are looking for opportunities in medical devices.
Some industries are still doing well
Due to constant demand, industries like pharmaceutical, medical device and food & beverages are not hit as hard as others. However, going deeper into luxury and ordinary products, when the market is not looking too optimistic, luxury goods sales will decline. Local companies are still growing well as compared to MNCs as they have enough funds and support from the government. Many of them are able to venture overseas as well.
This article is written by Coco Li – Director, Suzhou. She has over 16 years of experience in recruitment, 8 years in MNCs and 8 years in top headhunting companies. She specialize in recruiting in the HR, accounting, finance and operation functions in Manufacturing industry.