Key Features of the Industries and Firms in China

KEY FEATURES OF THE INDUSTRIES AND FIRMS IN CHINA
Author
Professor
University
City, State
TIME \@ "MMMM d, y" March 6, 19
Key features of the Industries and Firms in China
Since the adoption of economic reforms in the latter twentieth century, China has been one of the leading and fast-growing economies globally. The large industrial sector in China accounts for the majority of investments and export-related growth in the country. Among the factors facilitating the massive growth over the last several decades making China a global manufacturing leader include low labor costs, high productivity and well-developed infrastructure. The impressive growth in the country sectors is worth examining. This paper explores the key features of industries and firms in China.
China’s manufacturing prowess cannot be understated. In 2011, China became the largest producer of manufactured goods overtaking the US and consequently doubling the country’s GDP per capita within the last ten years (Eloot, Huang, and Lehnich, 2013). China has become a significant manufacturing powerhouse whose vast domestic market is accelerating the country into a consumption-based economy. First, an important aspect adopted by Chinese industries and firms is the increased funding in research and development. According to Haggard (2018; p.28), developing countries are underfunding in R&D; they lack competitive technological alternatives and acquire technologies with limited capabilities. Eloot, Huang, and Lehnich (2013), however, observe that there has been a change in R&D approaches moving beyond the ‘faster, cheaper’ approach to developing more innovative products. While R&D units are gaining tractions in some leading companies, funding is curtailed for the vast majority of Chinese companies.
In order to remain competitive and reach a global market scale, most Chinese companies and firms are taking advantage of economies of scale, innovation, and purchase and management. With the goal of disabling the market and initiating price wars, the companies engage a cost leadership strategy that aims at increasing production and sales with a low-profit-margin (Huang and Shen, 2012). The approach helps the companies grow their sales globally and internally while weeding out the competition. Haggard (2018) observes that without economies of scale, industries lose their competitiveness.
Chinese industries and firms also engage in cost leadership strategies involving low labor costs in their operations as compared to developed and high-income countries. Eloot, Huang, and Lehnich (2013) note that low salaries in China, among other things, have fueled manufacturing success in China. However, low-cost manufacturing may not remain viable with the increase in the R&D and the increasing quality of Chinese products.
Most industries and firms in China have integrated economic and ‘zero’ inventories in the supply chain and inventory management. The arrangement allows the firms to balance the forecasted demand and supply as well as maintaining high efficiency in the allocation of resources by coordinati...