Engineering Blog

What are the causes of the dilemma of China’s manufacturing industry


It has been said that the real economy and manufacturing industry are the foundation of other industries. Although in the past few decades, the manufacturing industry has led China’s economic development to a new level, but with the passage of time, the manufacturing industry has gradually become unable to meet its needs, and has fallen into a “dilemma”, which makes manufacturing enterprises and employees very distressed. So, what causes China’s manufacturing industry to be in trouble?

1、 The costs are rising

No matter how to analyze the manufacturing industry and machining industry, the rising cost has always been the primary reason. First of all, the rise of human capital, capital expenditure increased by 12% – 15% per year. Raw materials rose, the price difference between the first half of the year and the second half of the year is very big. Other cnc machining costs, such as rising gas, water and electricity, are exacerbating manufacturing difficulties. Moreover, the rise of house price leads to the rise of the rental price of the factory? How to rent cheap factory buildings for machining factories), coupled with the cost of logistics, each of which makes small and medium-sized manufacturing enterprises very distressed.

2、 Financing difficulties

As the cost rises, more money is needed. Banks have a lot of requirements in terms of lending, and the waiting time for approval is also long. Generally, after the loan is approved, the managers of machining enterprises also think of other ways to raise money. Most of the money borrowed by this “other method” has higher interest rate, so the direct result is that the cost is increased again and the profit is reduced.

3、 Labor transfer

Many employees on the production line of the manufacturing industry will be transferred to other jobs because of low wages. However, the manufacturing industry is unable to bear the high wage standard due to its own loan pressure. As a result, the manufacturing industry is short of personnel but unable to employ personnel, which brings many problems to the development of machining enterprises.

4、 Damage of real estate industry to real economy

There is a data show that China’s GDP last year was 67 trillion yuan, and the income from land sales was 3.4 trillion yuan. In the housing price, the land price accounts for 30%, at the same time, coupled with intermediary, decoration, home appliances and furniture, and other related industries. In this way, real estate investment accounts for more than 45% of GDP. Thus, the impact of real estate on the manufacturing industry is not just rent.

5、 Low social status

In fact, many people who are engaged in the dirty industry in our country are not always ridiculed by the old people who are engaged in the dirty industry. In China, the manufacturing industry has created a lot of jobs, maintaining 70% of China’s labor force.

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