I agree with Jim Jubak's assessment that there's little to no more play in producing cheap goods in China. Though, there are still over 900 million under utilized people/worker (mostly scattered across rural China), the commodity input and environmental destruction cost of producing plastic, cheap metal and hazardous products is overwhelming China and its inhabitants. The human and ecological cost to China over the last 15 years is mind-blogging. What are foreign investors that have already established their production base there to do?
First, they have to re-assess and analyze their own competitive advantage in a rapidly changing market-landscape. This mean understanding what drives success in their business and what're important and why their customers buy (will buy) from them as well as impacts from regulatory and technological changes. Secondly, they need to evaluate how their position and manufacturing base in China can help them compete to fulfill the needs of their customers by offering greater value (not price alone). Thirdly, they need to branch out of their own comfort zone to look innovatively of how their familiarity in their home markets and unique characteristics can gain them a competitive advantage in the marketplace. The new emphasis is no longer how to produce widget 1 for 25 to 40% less but to customize a widget that offers much more value for targeted customer groups. More to come in future postings.
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