How Chinese enterprises can leverage their comparative advantages after joining the WTO
China Enterprise Confederation and China Entrepreneurs Association Research Group
Accessing the WTO marks my country’s opening up to the outside world Entering a new stage is the practical need and inevitable trend for my country to integrate into economic globalization. The Chinese market will be fully connected with the international market and participate in international competition and cooperation on a larger scale and at a deeper level. Participating in global competition is a new test for Chinese enterprises, which face new opportunities and challenges. In order to give full play to their own advantages and make up for their own shortcomings, it is necessary to understand the comparative advantages of Chinese enterprises in international competition as soon as possible in order to maximize their strengths and avoid weaknesses, seek advantages and avoid disadvantages, and continuously improve their competitive strength. Therefore, studying the comparative advantages of Chinese enterprises has become one of the issues that Chinese enterprises are most concerned about.
1. The importance of studying the international comparative advantages of Chinese enterprises
China's accession to the WTO is a major strategic measure for my country's opening up to the outside world and a historic opportunity for China to participate in the world economic system. Since countries around the world are very different in resources, culture and history, are at different stages of economic development, and have their own different comparative advantages, it is currently of great significance to study and give full play to international comparative advantages:
1 , Resource allocation that is conducive to Chinese enterprises
The essence of the market economy is a profit-seeking economy, and the process of profit-seeking is the process of pursuing comparative benefits. Because under the conditions of fully realizing division of labor and exchange, economic interests are mostly reflected in comparative interests, and the purpose of seeking profits is achieved through the realization of comparative interests. Under the conditions of the planned economy in the past, we emphasized the formation of an independent national economic system, focusing on production over efficiency. Enterprises are also keen on the "big but comprehensive" and "small but comprehensive" models, without considering the issue of comparative advantage or maximizing corporate benefits. Therefore, the problem of duplication of construction and duplication of production in various regions and enterprises is very serious. Many enterprises are expanding at a low level, resulting in a huge waste of resources. Practice has proved that this model is not conducive to socialized large-scale production, efficient allocation of resources, and the essential requirements of a market economy.
From the perspective of the basic requirements of the market economy, with the formation and development of socialized large-scale production, economic division of labor and collaboration have become an inevitable trend, and maximizing economic benefits has become an inevitable choice for enterprises. The all-encompassing national economic system and the one-sided pursuit of self-sufficiency and "asking for nothing from others" are inconsistent with the basic requirements of a market economy. Since each region and even country has its own unique resource advantages in developing its economy, there is no need to establish a complete economic system. Similarly, each economic interest subject often has its own unique characteristics and advantages in its own production operations, and forms its own advantages in specific fields to achieve the lowest cost and efficiency in the social division of labor and exchange process. Therefore, The essence of a market economy is to emphasize the principle of interests, especially comparative interests. Giving full play to comparative advantages is the only criterion for selecting and efficiently allocating resources.
2. It is conducive to promoting the export of advantageous industries and products
International division of labor, cooperation and international trade will bring certain comparative benefits. However, my country's high import and export tariffs and quota restrictions for many years have slowed the international exchange of our products. Tariff restrictions and trade barriers cannot reflect the different comparative advantages of each country. After China joined the World Trade Organization, the pace of my country's economic integration into the international world has been greatly accelerated. Through the analysis and research of my country's products with comparative advantages, and proposed targeted measures, it is conducive to the export of products with comparative advantages of Chinese enterprises.
3. It is conducive to the adjustment of my country's economic structure and industrial structure
Through the analysis of comparative advantages, we can find out the advantages and existing problems of our country's current enterprises and industries, which is conducive to the production factors Shifting to products and industries with comparative advantages will further realize economies of scale in industries with comparative advantages, which will be conducive to the adjustment of industrial structure and the further improvement of corporate economic benefits.
4. It is conducive to promoting disadvantaged industries and enterprises to improve their competitiveness as soon as possible
Due to the reduction of tariffs and the elimination of trade barriers, it has become possible for our country to divide labor and cooperate with other countries in the world. For our country's current Products that do not have comparative advantages for the time being will be impacted by foreign products, forcing disadvantaged industries and enterprises to accelerate the pace of reform and reorganization and improve their competitiveness as soon as possible. my country's reform and opening up practice has proved that the sooner industries and products are opened up, the more competitive they will be. Develop competitive strength as early as possible. Some protective industries are often industries with poor competitiveness. Therefore, strengthening the research on comparative advantages is also of great significance to improving the competitiveness of my country's disadvantaged enterprises.
2. Comparative Advantages of Chinese Enterprises
Compared with foreign enterprises, although there are still certain gaps in technology and management between Chinese enterprises, we also have certain comparisons in many aspects. Advantages. Specifically reflected in the following aspects:
1. Labor force advantage
Enterprise competition is product competition, of which product price competition is an important aspect. Labor costs account for a considerable part of the price structure of products. In terms of labor costs, Chinese enterprises have a strong competitive advantage. Our country has abundant labor resources, relatively low labor prices, and has the advantage of low labor costs. According to relevant data, labor costs in mainland my country only account for one-eighth of those in the United States and Hong Kong. China currently has nearly one billion people in rural areas. After China joins the WTO, agriculture will be affected to a certain extent and the pace of transfer of rural surplus labor to cities will be greatly accelerated, which will further reduce the cost of urban labor and the costs of Chinese enterprises will have a strong impact. Advantages: For labor-intensive enterprises, product costs will be further reduced. This trend will give my country a greater international comparative advantage in labor-intensive industries such as textiles, clothing, and toys.
2. Market advantage
Another important aspect of my country’s comparative advantage is market advantage. China has a population of 1.3 billion and is the world's largest consumer market. China's domestic market has broad prospects and huge development potential. Take the home appliance industry as an example. According to statistics from the National Bureau of Statistics, in 2000, the ownership rates of color TVs, washing machines, and refrigerators per 100 households in China's rural market were only 48.74%, 28.58%, and 12.31% respectively. The rural market is far from saturated, and the market potential is huge. . China is in a period of comprehensive construction. Projects such as highways, overpasses, railways, power grids, and old city reconstruction have created huge market demand for related industries and products. In particular, the construction of the Three Gorges Project and the successful bid for the Olympic Games in Beijing have increased the demand for infrastructure and related products. The market space is larger. The annual material procurement of hundreds or hundreds of billions provides huge market demand for relevant Chinese enterprises. Except for a very small number of these materials and equipment that must be imported from industrially developed countries, due to transportation costs and other reasons, they mainly have to be produced nearby. The huge market potential, as well as the fact that Chinese enterprises are familiar with China's national conditions and the consumer psychology of the domestic market, plus the strong affinity of Chinese products in their own country, give Chinese enterprises strong advantages and competition in the huge market of China. force.
Chinese products also have considerable advantages in foreign markets. Judging from the demand levels in foreign markets, there is a market for high-end products, while the market for mid- to low-end products is wider. Especially in economically backward countries and regions, the demand market for high-end products such as high-end TVs, high-end audio, and digital cameras is very small, while mid- to low-end products are more popular. Even in the most developed United States, a large amount of wealth is concentrated in the hands of only a few people. Products for ordinary people are also mainly high-quality and low-priced. From alarm clocks, scales, and hair dryers in the morning to table lamps, pajamas, and slippers at night, they are almost inseparable from Chinese products. Even for products like home appliances, Americans do not all want expensive high-end products. The China Household Electrical Appliances Association organized a group to conduct a survey on the U.S. home appliance market. It is generally felt that home appliances are not a hot spot and focus of consumption among American families, nor are they a sign of family wealth. Ordinary Americans view white goods as practical, convenient and cheap, which are precisely the characteristics of Chinese products.
In addition, in countries such as Central Asia, South Asia and Africa, due to the low degree of agricultural modernization, agricultural transportation goods are scattered, the transportation volume is small, the transportation distance is short, and the access conditions are very poor, China's low-price, economical and practical products are very welcome . Therefore, Chinese products also have great advantages in foreign markets.
3. International competitiveness advantage
Some large enterprises or enterprise groups, especially some competitive industries and enterprises that were opened earlier in my country, in the process of long-term market competition , has accumulated considerable advantages in technology, talent and capital. Some companies have achieved considerable scale and strong R&D capabilities, mastered key manufacturing technologies for related products, and their brands have gained considerable popularity. Individual enterprises such as Haier have developed into world-class multinational enterprise groups by adhering to the idea of ????international operations. Haier Group relied on its strength and courage to select highly developed countries such as the United States and Germany as its main targets. It set up camp in the United States, established production and manufacturing bases, opened up the American and German markets, and then took advantage of the situation to expand into markets in other countries. In the latest statistics from Forbes magazine, the global white goods Haier Group ranks sixth in terms of comprehensive strength. At present, Haier has established 12 overseas factories, 56 trade centers, 15 design centers, and 53,000 marketing outlets around the world. Its products are sold to more than 160 countries and regions around the world. In 2000, Haier's total sales were 40.6 billion yuan, and its export earnings were US$280 million. At the current rate, Haier Group will be among the world's top 500 companies in 2003. ZTE Group recently provided GSM mobile communication equipment worth a total of US$225 million to Yugoslavia, achieving a breakthrough in my country's export of high-tech complete sets of equipment.
Tianjin Pharmaceutical Company has improved its core competitiveness through technological innovation and achieved strong international competitiveness in the raw material drug dexamethasone market. In the early 1990s, large multinational companies such as France's Russell Company relied on their strong strength to adopt a low-price strategy to seize the Chinese market, and Tianjin Pharmaceutical Company was forced to suspend production. But they were not discouraged. Instead, they summed up their experience and tried their best. After several years of struggle, they implemented the development strategy of "high technology plus economies of scale" in a planned way. They adopted more than 120 new processes and obtained their own technology patents. Many projects were approved. International and domestic advanced levels have regained the quality and price advantages, which not only caused the products of Russell Company and companies in the United States, Italy and other countries to withdraw from the Chinese market, but also occupied 60% of the Asian and 40% of the global market. These enterprises already have considerable competitiveness and influence in the international market, and their products have been recognized by the international market and have strong competitiveness.
Even though the overall level of some of our industries is currently not as good as that of developed countries, the demand in the international market is different. Every country has strengths and weaknesses in related products, and what it does and what it does not do. There is a division of labor in the international industrial structure. The basis of the division of labor is comparative advantage. Even the most economically developed countries cannot be advanced in all industries. All products have absolute advantages and competitiveness. In some fields, our enterprises also have certain advantages. As long as we choose our market positioning correctly, we will have our own market opportunities. Even in the fields of general machine tools, agricultural machinery, construction machinery and other machinery, our products have certain advantages in terms of quality, variety, performance and price, and can compete with similar foreign products. The price of domestic construction machinery is generally lower than that of imported original products. The market price of the main engine after the introduction of technology and localization is roughly equivalent to 50%-80% of the imported products of the same model. Products designed domestically and basically produced with domestic spare parts , its price is only about 1/4 of the imported products of the same model.
4. Advantages of the industry
Roughly speaking, most of my country's labor-intensive industries and products, such as textiles and clothing, cultural, educational and sporting goods, fur and down products, and other textile and light industries, Some building materials products, some home appliances, some mechanical and electrical products, some chemical products and some steel products also have strong competitiveness and have relative comparative advantages.
After joining the WTO, labor-intensive and resource-based enterprises will have a strong comparative advantage in the short term and can take advantage of the elimination of foreign market quotas and other non-tariff barriers, allowing enterprises that produce these products to gain greater room for development. Most of these products It is already not produced or rarely produced in developed countries.
my country's textile and garment industry is a typical representative of labor-intensive industries. It accounts for 8% of my country's industrial added value. It is China's traditional pillar industry and the second largest industry among my country's 38 industries. It is also my country’s largest foreign exchange earning industry. China is the world's largest textile producer, with a total fiber processing volume of 10 million tons; it is also the world's largest textile exporter, with exports accounting for 13% of the world's textile export trade. Twenty-three percent of China’s total merchandise exports. China's textile exports have also made great progress in terms of product structure and added value of exports in recent years. After China's textile industry joined the WTO, China has advantages in relative labor and resources, and has a relatively complete industry processing foundation. All these provide favorable conditions for China to participate in competition.
my country's light industrial products are widely welcomed abroad. In particular, industries such as bicycles, toys, pen-making, cultural and educational supplies, canned food, etc. that have established scale and mature technologies have strong competitiveness abroad. Our country's washing machines account for about 24% of the world's total output, refrigerators account for 16%, and air conditioners account for 30%. Chinese home appliances have entered more than 100 countries and regions. Among them, the annual export volume to developed countries such as the United States, Japan, Britain, Germany, and France has exceeded 100 million US dollars. Chinese light motorcycles are sold not only to developing countries such as Thailand, Malaysia, and India, but also to developed countries such as Germany, the United States, and Japan. In Asian countries such as India, Pakistan, and Afghanistan, light industrial products produced in China are very popular among local consumers due to their "cheap and high quality". Many products are only half the price of local products, and are more durable than many local products. With the end of the anti-Taliban war in Afghanistan, the post-war reconstruction work in Afghanistan will soon begin. Afghans returning to normal life will gradually purchase daily necessities, and light industrial products produced in China have become their first choice, ranging from color TVs, refrigerators, From bicycles and radios to towels and soap, Chinese products have a market here. The performance-price ratio of bicycles produced in China is far ahead in the world, so Chinese bicycles have become products in which China has considerable comparative advantages. In 2000, China's bicycle output was 50 million units, of which 32.8 million units were exported, accounting for 65.6%. The export volume of bicycles produced in China accounted for more than 60% of the global bicycle trade volume. In countries such as Afghanistan, bicycles are currently the most applicable and urgently needed consumer product. As long as they can afford it, bicycles produced in China will become their first choice. Chinese bicycle manufacturers predict that if the world situation stabilizes, exports of many bicycle manufacturers can increase by 30 to 40% next year.
5. Advantages of manufacturing industry
The trend of world economic development shows that manufacturing industry is the cornerstone of a country’s economic development and the basis for enhancing national competitiveness. No matter how science and technology develop in the future, manufacturing will always be an important industry in human society. But in the world of the 21st century, the manufacturing industry is undergoing a profound strategic reorganization, and a new round of optimal allocation of manufacturing resources is underway around the world. Due to China's abundant labor resources, relatively low labor costs, and abundant land resources, many multinational companies have gradually moved their manufacturing bases to China. In the near future, China may become the world's largest manufacturing center. This has brought considerable comparative advantages to my country's manufacturing industry, and my country's manufacturing industry also has a certain foundation.
First, production capacity plays a decisive role in the world. Since the founding of the People's Republic of China, especially since the reform and opening up, our country has established a strong manufacturing system and formed manufacturing bases in several fields. my country ranks first in the world in terms of total production of steel, containers, cement, flat glass, televisions, and watches, and its shipbuilding industry ranks among the top in the world. Our country has built a manufacturing system with relatively complete categories and a large scale. Indicators such as output value, profits and taxes, number of enterprises, and number of employees are all in a dominant position.
Chinese clothing emphasizes simplicity and elegance, advocating nature and harmony, and has styles, shapes, and elegance with Chinese cultural characteristics. It is not only popular among Chinese people, but also wins the favor of overseas consumers. It is presented as a genre in the international clothing market. In front of the world.
China’s cosmetics market is quite large, and world-renowned companies such as Procter & Gamble and Unilever have come to grab stalls and set up stalls. The multinational company's standardized operations, advanced management methods, globally standardized product features and overwhelming advertising and promotions have captured more than half of the market share in just a few years. Its main products are Rejoice, Pantene, Head and Shoulders, Safeguard, Tide, Olay, etc. There are not many Chinese people who don’t know this. In response to the challenges faced by multinational companies, Shanghai Jahwa gave full play to its advantages in knowing local culture and local markets, targeting consumers who have long favored traditional products, and introduced the therapeutic effects of traditional Chinese medicine into cosmetics, focusing on its own famous brand. The product "Liu Shen Pills" developed "Liu Shen toilet water", which has special effects of refreshing the mind, removing prickly heat and relieving itching. The product quickly gained 60% of the market share after it was launched. The subsequent "Liu Shen Shower Gel" was also very popular in the market. welcome.
Third, China’s traditional habits give my country’s relevant industries certain comparative advantages. For example, the traditional Chinese medicine industry has unique advantages in China and the world market. China's traditional Chinese medicine has thousands of years of fine tradition. "Take Chinese medicine when you are sick, and take Chinese supplements when you are healthy" has become a traditional habit of many Chinese people. Although Western medicine has the characteristics of accurate diagnosis and rapid curative effect, it is also accepted by many Chinese people. However, because Western medicine equipment and medicines are expensive, and Western medicines are mainly chemical synthesis products with serious side effects, causing many drug-induced diseases, not only is Chinese medicine valued in China, but the United States, which has always been discriminatory against Chinese medicine, is also vigorously promoting the use of traditional Chinese medicine. Research on traditional Chinese medicine characterized by natural therapies. Therefore, my country's traditional Chinese medicine industry based on traditional Chinese medicine has great development prospects.
Fourth, the characteristics of China’s rural market determine the comparative advantages of Chinese enterprises. There are nearly one billion farmers in China, which is a very large consumer group. Many domestic and foreign companies are already optimistic about China's rural market, and the focus of market development is also focused on launching China's rural market. Compared with foreign companies, we ourselves understand the characteristics of China's rural market better. Due to the limitations of their economic base and cultural level, rural China needs products that are cheap, durable and easy to operate. There are also many rural areas where the voltage is unstable, transportation is inconvenient, and mountainous terrain changes greatly. It is difficult to adapt to some imported equipment and home appliances with high precision, multiple functions, complex operations, and stable voltage requirements. Simple functions and easy operation are more welcome. , Chinese products with strong voltage adaptability, easy maintenance and low price.
Extended reading: How to buy insurance, which one is better, and step-by-step instructions to avoid these "pitfalls" of insurance