Innovation, Internet key to real economy
(chinadaily.com.cn), Updated: 2015-09-10
More than 1,700 business leaders, government officials, researchers and analysts shared their thoughts on the transformation of China's manufacturing sector at an investment symposium in Xiamen, Fujian province on Sept 8.
The direction in which the manufacturing sector is heading for poses as a serious question to China and the whole world, said Zhu Xian, vice-president of the World Bank, during the main session of the 2015 International Investment Forum held in Xiamen, Fujian province, on Sept 8.
Zhang Hanya, president of the Investment Association of China, said that the real economy in China is slowing down, while almost every sector faces the same problem of over production.
The rising labor cost in China poses another challenge. Si Zefu, chairman of the Dongfang Electric Corp, a State-owned enterprise that specializes in manufacturing of power generators, said that a driver hired by their Beijing office is paid 3,500 to 4,000 yuan ($629) per month, compared to a monthly salary of 1,500 to 1,800 yuan for a driver in Vietnam or Indonesia.
Relocating to benefit from lower labor costs is a method that many companies have resorted to. However, it does not appear to be the best solution to the problem in the eyes of Jack Ma, executive chairman of the e-commerce giant Alibaba Group. Ma said that low salaries cannot attract high-end talent that is essential in industrial innovation and the production of high-quality products.
Innovation is the key to transforming the manufacturing industry, according to Zhang. As a matter of fact, many domestic companies have started to develop robots as substitutes of manpower to cut labor costs.
Dong Mingzhu, chairman of Gree Electric Appliances Inc, a major home appliance manufacturer based in Zhuhai, Guangdong province, said that many of their workshops now operate without manpower; jobs that previously required 10 to 20 people can be done by one worker. She also said that Gree is committed to technological innovation and that the company owns 17,000 patents.
Dong said that Internet technology is beneficial in terms of upgrading customer services. Jack Ma said that the real economy and the digital economy can be integrated through Internet technologies.