China churns out top ratings as world's factory

PUBLISHED : Tuesday, 14 May, 2013, 12:00am
UPDATED : Tuesday, 14 May, 2013, 4:30am

Global manufacturers have picked China as the top sourcing destination outside their home countries, cementing the mainland's status as the world's factory, a survey has found.

The survey, conducted by global accounting firm KPMG in November last year, said respondents from Japan, Germany and Britain - three of the five largest economies - had chosen the mainland as their top sourcing destination after their home bases. The United States chose Canada, followed by China.

The 335 respondents surveyed by KPMG were senior executives from five industries, including aerospace and defence, engineering and manufacturing, and automotive.

"China continues to be a magnet for global manufacturing companies, as it remains the fastest growing in the world," said Alex Shum, a partner at KPMG China.

China continues to be a magnet for global manufacturing companies, as it remains the fastest growing in the world
Alex Shum, a partner at KPMG China

The central government's policies to upgrade the country's manufacturing industry would also help maintain China as one of the most attractive investment destinations globally in various sectors, he added. "Under the 12th five-year plan, the Chinese government's policies remain on course in terms of favouring investments in high-end equipment manufacturing, hi-tech, energy-efficient products and new materials sectors," Shum said.

Although increasing labour costs and worker shortages have raised concerns that China is losing its edge, economists said its manufacturers could maintain their competitiveness.

"Chinese manufacturers are undergoing a structural change. They are now pursuing high technology for value-added products. It's different from the past when Chinese companies focused on low-cost production," said Raymond Yeung, a senior economist at ANZ Bank.

He said China could maintain its importance as a top sourcing destination for global companies over the next decade despite rising competition in Southeast Asia and Latin America.

"Chinese manufacturers have established good co-operation with their global partners, such as companies from Europe. This is a long-term relationship," Yeung said.