Chinese official data, although known for its unreliability, suggests a relatively optimistic interpretation of the figures. It was widely anticipated that the trade war with the United States and signs of a global economic downturn would contribute to a slowdown in Chinese manufacturing and industrial output.
The data, provided by China’s National Bureau of Statistics, examines industrial output across the Chinese economy. While it does not differentiate between manufacturing output in various sectors, it serves as a reliable indicator of certain economic conditions.
Unfortunately, the Chinese retailing sector did not fare much better and experienced sluggish growth, reaching a rate not seen since April. Moreover, the growth figure of 7.6% falls short of the economists’ prediction of 8.6%.
These numbers will undoubtedly disappoint many investors. Despite weathering the ongoing trade dispute with Donald Trump in the first half of 2019, the Chinese economy is currently experiencing its slowest growth in three decades. Chinese exporters, like their American counterparts, are bearing the brunt of the trade tensions between the two governments.
Impact on Manufacturing Base
Given the slowdown in the Chinese manufacturing sector, many businesses may question the potential impact on their plans. Numerous US-based businesses rely on Chinese prototype manufacturers for low volume manufacturing and other rapid prototyping services.
However, the current weaknesses in the Chinese economy should not dissuade US businesses from investing in prototyping or general manufacturing services in China. Whether one seeks a manufacturing partner for prototype models or mass production, China remains a dependable and robust manufacturing base.
Companies like Want.Net facilitate the utilization of Chinese manufacturers for US businesses, offering services such as CNC machining, injection molding, sheet metal fabrication, as well as polymer and metal 3D printing.
Advantages of Chinese Manufacturing
The most notable advantage of manufacturing in China is the lower costs. Chinese labor comes at a more affordable price, allowing businesses to capitalize on this cost differential. Outsourcing manufacturing to China also absolves companies from the responsibility of training workers or ensuring their working conditions. However, maintaining ethical practices and partnering with reputable businesses is crucial to avoid negative PR consequences.
China’s significant role in global manufacturing is a result of its massive scaling of capabilities, leveraging its extensive population. Chinese factories now possess greater production capacities than their US counterparts.
For businesses, this translates into significantly reduced manufacturing costs per unit. Even for those seeking low volume manufacturing or prototyping services, Chinese manufacturing offers more cost-effectiveness.
Moreover, an often-overlooked benefit of manufacturing in China is the potential for expansion and diversification. A decrease in manufacturing output, as seen recently, may yield advantages for businesses looking to invest, as manufacturers will be eager to strike deals, potentially resulting in highly competitive offers for available contracts.
Most manufacturers are capable of handling multiple types of manufacturing, and if they are unable to, alternative nearby manufacturers will be available to provide assistance.
While the Chinese economy is currently experiencing a slowdown, it is undeniably still growing. The question remains whether the Chinese government is manipulating the figures and to what extent. Independent market analyses that employ various methods to calculate actual Chinese manufacturing output are often prudent to consider.
Regardless of the Chinese economy’s pace, it continues to provide essential services to the global economy. China’s position as the global manufacturing hub is based on its ability to deliver exceptional returns on investment for businesses. Choosing China as a manufacturing base allows for reduced lead times and per-unit costs. Selecting a reputable manufacturer is vital, not only for ethical reasons but also to ensure the highest possible quality. In this competitive market, businesses have the leverage to demand the best.
