Trade Resources Industry Views Being an Efficient Low-Cost Producer Is No Longer Enough to Prosper

Being an Efficient Low-Cost Producer Is No Longer Enough to Prosper

As China’s growth inexorably slows, manufacturers such as Linan Meite Cable are discovering that being an efficient low-cost producer is no longer enough to prosper.

Factories that had thrived by using cheap migrant labor to churn out inexpensive clothing, electronics, and toys for export now face changing government priorities as a growth engine based on investment and trade loses its momentum after more than a decade of double-digit expansion.At the same time, China’s labor costs are rising and global demand is still weak, putting pressure on manufacturers to move into more advanced production, consolidate into bigger entities or shift to cheaper inland regions to survive.Growth in the world’s second-largest economy eased to 7.4 percent last quarter, the lowest since a mini-downturn in late 2012, government figures showed Wednesday.

Last year’s expansion of 7.7 percent tied 2012 for the weakest since 1999. Leaders in Beijing have indicated that slower growth is the price to pay for long-term changes to the economy that reduce its dependence on trade and industrial and infrastructure investment. Instead, they want growth to be sustainable, less polluting and based on domestic spending by 1.2 billion consumers.Caught in the middle are companies like Linan Meite, which sells shipping-container loads of electronics cable to customers in Europe and North and South America.

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China Factories Face New Challenge as Growth Slows