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Xinhua Article on China’s Current Manufacturing Model

Xinhua published an article on the current manufacturing model in China. The article said that manufacturers do not invest sufficiently in research and development and do not have the urge to transition from a traditional manufacturing company into one that conducts its own technological innovations. Because Chinese manufacturers don’t own the core technology and can only make a small profit, they have lost their competitive advantage in the international market. The article also pointed out that the contribution from China’s scientific research remains low. The rate at which a research concept is actually converted into the final product is at less than 5 percent. At the same time, China is losing most of its elite talent to foreign countries. According to the article, the statistics available during a recent international optoelectronics expo held in Wuhan City suggested that 77 percent of the world’s cell phones are made in China each year. However, China only owns less than 3 percent of the chip technology. Therefore it has to spend over US$200 billion a year on cell phone chip imports.

Source: Xinhua, November 10, 2014