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Global industries have been re-arranged in this regard. While China’s reform and opening up has seized this historic opportunity, it has taken full advantage of the tremendous opportunities brought about by globalization’s economic integration, and has been able to break into the international market with its cost advantage of a large amount of cheap labor, thus maximizing its release. Accumulated productivity. Because of this, more manufacturing links have been placed in China, more technology and capital have been brought to China, and China has rapidly emerged as a pivotal player in the borderless world.
This is an opportunity for China and it is also a result of China. However, the problem is that China also faces unprecedented challenges and problems at the same time. As the cost of quality, labor, and raw materials rises, sharp conflicts such as exchange rates, environmental protection, and trade protection are highlighted. The dilemma faced by China is that the inherent competitive advantages are gradually being weakened, and new development periods require new business rules. Will China still be able to laugh at the end? For those who understand China's problems and care about their future, they are eager to know that manufacturing industries that once made China glory for a while and make other countries and regions look admirable. Where should its outlets be? How is its development path? Can national companies such as Huawei, Lenovo, and Haier, who once made their country proud and expecting, become true world-class enterprises? Or, what kind of industry, when and in what way does China create these companies?
In fact, these questions can all be turned into a problem - is China's participation in global competition, the usual "killer" (cheap labor, low-cost manufacturing, scale effects and other production advantages) is still valid? If not, what strategy should be used to respond?
This is exactly the question that “The Dragon is in the world: A new pattern of China's manufacturing in the next decade†tries to answer. In the book, the author puts forward a concept of “cost innovationâ€, and the solution is still attached to the cost. According to the author, cost innovation has two levels of meaning. First, companies reduce costs further through innovation rather than simple low-factor costs. Second, companies creatively apply various methods to achieve innovations in a low-cost way, resulting in a significant increase in cost-effectiveness and creating a global competitive advantage. "Technical innovations in a low-cost way, and cost reductions in technological innovations" can be used as the most important interpretation of cost-innovation strategies.
It sounds great, isn't it? A simple concept of cost innovation combines the advantages of many strategies such as innovation, cost, technology, marketing, etc. The emergence of it all reveals an ambition and attitude. In the face of numerous international players, Chinese companies will adhere to the Low prices offer newer, better and more quality products, ranging from traditional to high-tech. Here, the price war is no longer just a low-level competitive situation. It is very real and destructive. For any consumer in every corner of the world, price is always the constant preference criterion. The economic value equation provided to consumers around the world has been rewritten by Chinese competitors in a cost-innovative manner. The spoiled global consumers made in China have raised the importance of cost-effectiveness to an unprecedented level. In other words, in the past, China’s low-price strategy has completely overturned the global competition landscape. China was once the beneficiary and the maker of this changed rule. For such vested interests and congenital advantages, China does not need to give up, and it takes the initiative to passively choose another path. China should continue to implement the price strategy and accelerate cost innovation. This is not an empty imagination but is determined by China's national conditions and the status quo.
As we all know, due to the limitations of the entire education system in China and the lack of accumulation, it is necessary for China to make qualitative breakthroughs in original and cutting-edge basic research and inventions and it will take time to accumulate. As the author said: “Independent innovation is a very important development strategy for realizing industrial upgrading, but the core issue is what kind of innovation path we should choose when our own resources and capabilities are very limited. Is it really effective? The basic guiding principle for China's innovation in the next 10 years should be 'cost innovation' because it is a way for the poor to innovate. China started late and has a weak foundation, so its comparative advantage is often not a cutting-edge, high-tech set of things. It is a matter of cost and cost-effectiveness. It is like the benchmark companies mentioned in the book, such as Haier, BYD, Huawei, and CIMC. They all use process innovations and technology upgrades to reduce costs and become leaders in the industry at home and abroad. From this point of view, cost innovation is not only theoretically possible, but also feasible in practice. It is not a contradiction as people had previously imagined. In the business world, most people are accustomed to providing functions. More and more complex products are associated with innovation.
In the past year, the Austrian economist Schumpeter proposed the concept of "disruptive innovation", which means breaking the existing rules and models and overturning the existing balance of forces to promote the transformative development of things. The author of this book follows the concept of "disruptive innovation" and creatively proposes "cost innovation", an innovative solution for poor people, based on China's actual situation. The significance of this theory lies in the inspiration and self-confidence of China's manufacturing industries, which are immersed in the quagmire of price wars, as long as they effectively use technological means to continuously reduce production costs while satisfying the individual needs of consumers and earn more. The value premium is not an impossible task. What it reveals is the glory and dream shared by all Chinese companies in the era of globalization and the flat world: Dragons must be the world!
China's Manufacturing Industry
From the world factory to the world market, from manufacturing in China to creation in China, China has completed a major economic transition in 30 years. Few people can predict that since the 1970s, the global economic integration has accelerated, open trade has led to the deepening of the global division of labor cooperation, the industry chain has been repeatedly restructured, and the popularity of information and outsourcing has promoted more and more Many industries have become modular, platformized, and standardized.