Commentary: How resilient is China’s ‘world’s factory’ to supply chain shifts?

Commentary: How resilient is China’s ‘world’s factory’ to supply chain shifts?

NEXUS FOR Overseas Customers

Yiwu’s strong production performance reflects China’s broader transition from real property to production expense. China’s industrial output increased by 6.1 % in the first quarter of 2024, and manufacturing investment increased by almost 10 % in comparison to the GDP growth rate of 5.3 %.

While China delivers cheap products worldwide, overcapacity has increased political risks and business tensions, highlighted by Xi Jinping’s new European vacation, aimed at mitigating these tensions. China’s commercial consumption percentage dipped below 75 per cent in first 2024, the lowest since 2016- excluding 2020 at the outbreak of COVID- 19- uncovering possible resource waste.

Yiwu’s trade resilience is fueled by a complex system of data exchanges and creative output across enterprise boundaries in addition to its low-cost products. Its quick production and delivery features help it deal with small orders quickly. This flexibility notably contrasts with big manufacturers, which rely on very organised, big- scale production.

Yiwu demonstrates special organizational skills that enable quick and cost-effective generation tailored to specific directions as the connection for foreign purchasers and a wide range of suppliers, primarily small and medium-sized enterprises.

Yiwu’s considerable commercial clusters, which promote cooperation and competition between firms with close proximity, provide the foundation for its production and delivery capabilities. These clusters are organised around Yiwu’s 78 industrial parks, which are home to over 4, 500 small and medium enterprises ( SMEs ). These SMEs are strengthened by the local government’s provision of online tools, flexible production methods, and assistance services, as well as by professional associations ‘ software of production standards.

Yiwu demonstrates China’s ability to produce large-scale creative products with multiple-layered offer stores. Though trade revenues from products like lighters may sound reasonable, their output is underpinned by complex supply chains incorporating over 30 components, including materials, precision moulds and electronic automation. Maintaining cost competitiveness requires innovation in light of rising labor and material costs. To meet diverse production and safety standards, this requires high-quality machine tools as well as robust coordination.

Large- scale co- production also has application in other industries. Companies like SHEIN, an emerging fast fashion brand, have revolutionised the sector, outpacing traditional players like Zara.

Unlike Zara, which relies on in- house production, SHEIN depends on thousands of SMEs and organises a flexible” small- batch” production approach that caters to rapid product design, manufacturing and delivery.

By harnessing big data and AI algorithms, SHEIN quickly adapts to market trends. SHEIN introduces between 700 and 1, 000 new products daily, and updates around 50, 000 new items weekly, compared to Zara- which introduces 25, 000 new products annually.