|
China has transformed into a trade powerhouse and a world factory with
more than two decades of market reforms and opening up, but the country
should not just be a world factory, said participants at China Business
Summit 2004 Sunday in Beijing.
China Business Summit 2004, sponsored by the World Economic Forum and
China's National Development and Reform Commission, is being held on Sept.
12-13 with a wide-ranging program focusing on balancing China's fast and
smart growth.
"The challenge for China now is not just to be a part of the global
supply chain, but to move up the value chain as well," said Frederick Hu,
Managing director with Goldman Sachs.
China today is a vital part of the global supply chain for it is the
world's largest producer in a range of products including textiles and
clothing, telephones, color TVs and microwave ovens, with a third of
global production, he said.
"To date, much of manufacturing in china is heavily concentrated on
labor intensive, simple processing and assembly operations. It's not
sustainable for China to rely completely on those low value added and low
margin business," Hu said.
He suggested that Chinese firms must boost investment in research and
development(R&D) and acquire and own intellectual property from brands,
copyrights to patents and trademarks, and the country then will stay
competitive in the global supply chain and even move up the value chain.
According to statistics, Chinese companies spent averagely one percent
of its total sales on R&D in 2003, much lower than world average of
five percent.
Scott Summerville, President with Rockwell Automation Asia Pacific also
pointed out that China should recognize that low cost labor is not a
permanently competitive advantage; innovations and product development are
eagerly needed in the manufacturing process and supply chain integration.
He said, China should further promote a mindset among enterprises that
manufacturing and the supply chain are vital areas of competitive
differentiation and strategic advantage.
The companies should also deepen and widen the understanding that
information is power and its pervasive acquisition and use in the
manufacturing environment is critical to achieve manufacturing strength,
he suggested.
He acknowledged that the country is already moving in this direction
and it's good development that growing companies are beginning to learn
the power of brands and building brand equity.
"But how long will China remain just a factory really depends on how
quickly China can make the changes mentioned above," he said.
(Xinhua) | 
Updated: 2004-09-14 10:44
