Preface :
Yangtze River Delta Economic Region (Chinese: 长江三角洲经济区) is an economic region in China that encompasses Shanghai municipality, Jiangsu, Anhui and Zhejiang province. The region accounts for 20 percent of China's Gross Domestic Product and is responsible for one third of its imports and exports.
The Pearl River Delta Metropolitan Region (PRD), also known as Zhujiang Delta or Zhusanjiao, is the low-lying area surrounding the Pearl River estuary, where the Pearl River flows into the South China Sea. It is one of the most densely urbanized regions in the world. This region was also the source of much Chinese emigration from the 19th to the mid 20th centuries, including to the Western world, such as the US, Canada, Australia, Latin America, and much of Southeast Asia, where they formed many Chinatowns. Today, much of the Chinese diaspora traces their ancestry to this region. Its dominant language is Cantonese.
The process of modernization of manufacturing in China began in the 1980s with the transfer of industries from Asia Tigers (Korea, Taiwan, Singapore and Hong Kong) to mainland China.
Taiwan-funded enterprises started from early 1980s in the coastal areas such as Fujian and Guangdong. From the 90's they began to enter Jiangsu and other inland areas.
Hong Kong-funded enterprises started from the beginning of the 80's, the Pearl River Delta was the first choice for Hong Kong to transfer labor-intensive manufacturing industry. Firstly focused on mainly toys, clothing, plastic, hardware and other low-end manufacturing industries, then gradually transferred to electrical and electronic components and other products.
The European and the United States manufacturing enterprises started to enter China from 1995 onwards, accompanied by high-end manufacturing, such as automobiles, consumer electronics, industrial equipment and medical devices which included certain technology, intellectual property and market position products.
Zhejiang and Fujian are similar in manufacturing industry, starting with trading on consumer products. Jiangsu, Shanghai and Guangdong manufacturing industry has not focus on consumer goods processing in recent years. Relatively speaking, these areas are engaged in precision parts manufacturing and product assembly. For examples, plastic parts, metal parts, electronic components, electrical components, as well as some of the assembly of finished products, etc. Processing industry is the expertise of these areas in manufacturing aspects.
Actually these manufacturing industries have gone through several stages of development:
First stage is foreign made finished goods localization in China. At this stage an interesting perspective emerges that professionals who have particular skills or resources quit their job in the factories and started their own manufacturing workshops. The trend of development is basically driven by foreign clients. From our business experiences with several Apple suppliers, 10 years ago they had only 10~20 employees. After several times of mergers and acquisitions the production scale is bigger and bigger.
Second stage is the localization of raw materials. Some manufacturing enterprises starting to move their focus towards materials assembly and processing, or providing purchasing solutions. Many factories began to become experienced and competitive in diverse industries for examples medical and automotive area.This stage actually offered with those enterprises incomparable opportunities.
In the third stage most of the enterprises have focus on enhancement of internal operational efficiency. Some companies pursuit low-cost on operation and management they move the factories to inland of China. Some profit-seeking companies which have forefront insight started to develop capabilities on R&D. The choice and development of these enterprises are also more diversified.
The Pearl River Delta is represented by Guangdong and is similar in processing capacity to most of the manufacturing industries in Shanghai, Jiangsu. The manufacturing industry is well known for its precision manufacturing. However, these enterprises overall viability is strong, maybe started in a residential building, can indeed produce a lot of inexpensive but good quality products. Clients source most of the suppliers like factories of smart hardware in Shenzhen and the surrounding neighborhood cities because these manufacturing enterprises indeed have advantages of producing low-cost product and is available at short delivery time due to logistics transportation is convenient and efficient.
Yangtze River Delta region is represented by Jiangsu-Shanghai is indeed same category, similar to Guangdong. The difference is that many manufacturing enterprises as part of the supply chain of the European and the American manufacturing buyers, align to the western manufacturing industry in all aspects such as the management style, cost level and so on. If the pursuit is Low-cost, it’s advised to go to Zhejiang and Guangdong province to find suppliers. If the pursuit is high quality, reliability (for example, many parts of medical devices require rigorous process validation, automotive components need to do PPAP, etc.), and degree of industrial maturity, it’s more appropriate to find suppliers in Jiangsu, Shanghai areas.
The Zhejiang Enterprise in Yangtze River delta area is another category, cost-control is well managed. On one hand, they reduce costs by large-scale processing of a single product, hence has character of being labor intensive, on the other hand, the business viability is strong.
Above all stands Sinoproparts SCM expert team's point of view is only for reference.
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