Since last year, a large number of low-end manufacturing companies have moved out of China, and according to a report by Daiwa Securities Capital Markets, preliminary signs show that Southeast Asian countries are beginning to surpass China as a low-cost manufacturing center. This trend may accelerate in the next few years. China is likely Lose the status of "World Factory" in the next 5-10 years.
Fitch International said that the wage standard of Chinese workers has increased by 87% since 2008; according to the current price of China to meet the basic needs of workers, the wage standard has to rise by 46%.
The Eighteenth National Congress of the Communist Party of China proposed that the per capita income of urban and rural residents in 2020 will double that of 2010, so the wage level will inevitably increase accordingly. The "Louis Inflection Point" proposed by the Nobel Prize winner in economics, assuming the unlimited supply of labor, the turning point of labor from surplus to shortage, refers to the gradual transfer of rural surplus labor to non-agricultural industries in the process of industrialization. The surplus labor force gradually decreased and eventually dried up.
The reason why China can become a "world factory" in just two or three decades is directly related to the unlimited supply of cheap labor in China. Under the condition of unlimited supply of labor, labor lacks bargaining power, and wage levels can remain unchanged for a long time. When the "Louis Inflection Point" appeared, wages began to change from a standard movement to a steep rise. If the company used the original price, it would definitely not be able to recruit workers. Especially with the high price, the difficulty of recruiting workers became more obvious. Corresponding to this is the end of the "demographic dividend" era.
In addition, the 18th National Congress of the Communist Party of China has made it clear that China will become an innovative country by 2020, which means that preferential government policies will be biased towards technology-based enterprises. With the continuous increase in labor costs, extensive enterprises at the low end of the industrial chain Optimization and upgrading have become inevitable.
The "bottom" fate of foundries
The "globalization" advocated by the United States is the international division of labor. In the current globalization system, companies in Europe, America, Japan and South Korea occupy a key position in the division of labor in the globalization industry. Other regions are at the low end of the industrial chain, and more often participate in globalization in the form of contract manufacturing.
In the international division of labor in the globalization of the LED industry, the United States, Europe, and Japan are still in the upper reaches of the industry to occupy key technologies. American Cree and German OSRAM master the core technology of LED chips; the LED die provided by Japan Nichia Chemical and Toyota Synthesis are considered to be the best at present, and their LED die production capacity accounts for about 80% of Japan.
In addition, LED midstream packaging technology is basically in the hands of mainland China and Taiwanese companies. Domestic LED packaging export companies basically do OEM for European, American and Japanese companies, but OEMs are the most difficult in the context of globalization.
Today, Europe, America and Japan have a set of management methods that strictly control foundries. Generally, large enterprises will send a "contract for manufacturing" to the foundry. In this document, the brand, quality, and quantity of the relevant raw materials have been specified. Not only that, the subsequent logistics, maintenance, training, and employment There are also clear and unambiguous calculations. Customers only pay to OEMs at a higher labor cost. In short, LED packaging OEMs earn the difference in labor costs.
With the increase in labor costs, the profits of LED packaging OEMs have decreased significantly. The lower the profits, the more they need to rely on volume to maintain profitability, so they can only expand production capacity and recruit more employees. This business model relying solely on human tactics will be forced to a dead end by rising prices, labor costs and exchange rate fluctuations.
Key technologies determine the future
Take Apple's supply chain as an example. Under the wave of globalization, Apple is the most successful company. An iphone4 mobile phone display screen is manufactured by LG, South Korea, flash memory is manufactured by Samsung, sensors are manufactured by Murata, Japan, digital baseband, RF transceiver, and power management devices are produced by Infineon, Germany, and touch screen is produced by TPK, Taiwan Heshenghua produced them, and finally these parts were assembled in China and assembled by Foxconn.
In the production of each iphone4, Apple pays US $ 28.5 for LG display, US $ 27 for Samsung flash memory, US $ 14.05 for Infineon baseband chip, US $ 10 for Taiwan touch screen, and 6.54 The dollar is assembled for Foxconn.
This industry's international division of labor supply chain should alert Chinese LED foundry companies. Only mastering key technologies will have greater profits. The lower the technological content, the easier it will be replaced and the lower the profits.
Luo Sujun, general manager of Hong Kong Jinghui Optoelectronics Lighting Co., Ltd., said, "Although there are very few LED packaging companies in China that have been recognized by European and American companies, domestic LED companies have followed suit seriously, leading to similar packaging technologies. Domestic LED packaging companies have the best equipment However, the quality of LED talents is generally low, and the management level is backward. Compared with Chinese Taiwanese companies, the packaging technology of domestic LED companies is still far inferior.
In the future industrial internationalization division of labor, the more scarce the technology, the higher the value it reflects in the internationalization division of labor. Domestic LED foundry enterprises can only occupy an important seat in the international division of labor of the industry by improving the product technology content and mastering the higher-end LED technology.
Transformation is imminent
In the past, Chinese companies used the demographic dividend advantage to achieve rapid development for OEMs in Europe, America, and Japan. Made in China spread throughout the world. But a financial crisis triggered by the United States changed this situation. The United States forced the RMB to appreciate, and a large amount of international hot money poured into China to push up prices, making China's labor advantage gradually disappear.
Japan and South Korea are also in the international division of labor, but Japan and South Korea have mastered the core technology of key parts. European and American companies can tolerate the transfer of inflation to products by the value added products of Japan and South Korea, while China is at the low end of the industrial chain division of labor, without the results of key technologies It is to pass on inflation to the workers. As a result, many domestic foundries have become sweatshops.
Chinese companies must have high-end technology to support the world. As far as the LED industry is concerned, China has the conditions to produce the world's top 500 companies. Li Jiren, executive director of NMBA EMBA executives, said: "There is an international saying that a truly international company requires sales in at least three continents among the major continents such as the Americas, Europe, and Asia. It accounts for more than 20% of total sales, but only a few companies such as IBM, Apple, Google, etc. can make it. This shows that most companies in the world have grown up relying on the local market. The huge consumer market in the United States is impossible to produce clusters like Silicon Valley. Fortunately, the market in mainland China is currently large enough to give birth to a group of international-level enterprises. "
Wu Jinglian, a researcher at the Development Research Center of the State Council, has repeatedly sincerely emphasized in the public that China's low-end manufacturing companies need to change their development model. This is a signal that China's model of relying on low-end manufacturing has come to an end.
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