China’s Advantages in Production

In our day to day lives, the majority of the things we use are made in China. Whether its a computer, a piece of clothing, or a microwave; its made in China. This is attributed to a number of reasons. In our class, we have seen that understanding labor markets is essential to achieving efficiency. Countries will trade with the countries that produce goods at the cheapest costs that retain quality in their products. China has become the hub of manufacturing because it has cheap labor, low taxes on exports, and an efficient business ecosystem.

Since China is a very populated country, the supply of workers is greater than the demand for labor. As a result, wages are very low and production costs are lower than other countries. Additionally, China is not very strict on things such as child labor, safety regulations, and long shifts regulation. Low tax rates on exports further China’s advantage in manufacturing goods. To conclude, it is likely that China will remain “The world’s factory” due to the many advantages it has in manufacturing.

http://www.investopedia.com/articles/investing/102214/why-china-worlds-factory.asp

1 Comment »

  1. huangz Said,

    December 17, 2014 @ 3:52 pm

    Low wages for works in China greatly help the companies to save money. The marginal cost for works is low so the factories can make more profits.
    However, in recent years, the average wages grow quickly. Many factories have to pay higher wages to attract workers. The demand of workers is higher than the supply of workers.
    As a result, many international companies have already moved their factories away from China to Vietnam, Indian and other south Asian counties.
    Since the cost of products grow, the products will have less competitive power when export.

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