Productive, efficient, and abundent labour : labour costs in China are 10% of the labour costs here. Even with higher wage growth
China's labour advantage is expected to be maintained through our life time.
In real terms that means average wage costs are $US30,000 per factory worker
lower in China. In well run factories Chinese workers are deeply committed to factory
outcomes and there is ample evidence of higher productivity per head count
employed. China's labour resource delivers lower relative cost and higher relative
productivity.
Lower operating overheads : Chinese economic zones provide lower overheads for manufacturing. For example
rental of factory space at $10 per square meter vs $140 square meter in the west.
Superior access and better terms with raw materials : China has tremendous raw material reserves, and is also geographically located
close to raw materials from Australia, and the Asian subcontinent.Manufacturing
input costs are therefore lower here than in most countries.
World class infrastructure : China has the worlds largest port network along its eastern seaboard. It has invested
heavily in road, rail, shipping lane networks and broad band communication
infrastructure. This allows rapid and low cost movement of goods and services.
Optimal scale and low gearing : a good factory has optimal scale and in turn has rapid turnover of factory
infrastructure. Successful factories reinvest in themselves. Good factories
achieve growth primarily out of retained earnings.
Effective Governance : China's governance model is unique in the world. It has lifted 300 Million people
out of poverty in 20 years - primarily via industry development - an unparalled
achievement in human history. The governance model drives efficient and world
class achievement in almost every industry sector. While the press reports
are often negative, China is four times the size of the USA or Europe, and relative
to its size and stage of development, it has a remarkable level of harmony. |
