"Made in China" climbs global value chain
Last Updated: 2014-03-12 01:35 | Xinhua
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Manufacturing is usually slack in early spring, but HuagongTech's workshops are rumbling to meet a big contract for the company's latest laser.

The central China high-tech firm, with its cheap and efficient auto welding laser, beat foreign rivals to supply a joint venture of Ford and home-brand JMC.

"When HuagongTech was founded in 1999, we had to import core components from Western countries," Ma Xinqiang, head of the company, told Xinhua on the sidelines of the ongoing session of the national legislature.

"After we stepped up investment in innovation and talent, our lasers broke foreign dominance and now boast a global reputation," said Ma.

HuagongTech's ultraviolet lasers have been chosen by global names like Samsung and Microsoft. The company is now doing business in more than 40 countries and regions.

"Chinese enterprises are engaging in more value-added business,shifting from selling cheap goods to conceptualizing and delivering high-end products," said Liu Zhibiao, head of Jiangsu Academy of Social Sciences.

China has made unprecedented strides in development, but the most astonishing tale is about the so-called "factory floor of the world."

Chinese enterprises, especially in the manufacturing sector, used to live by wafer-thin margins without holding core intellectual property rights.

Research in 2013 by Robert Koopman and Zhi Wang from the U.S. International Trade Commission, and Shang-jin Wei from Columbia Business School, showed domestic value-added accounting for less than half the value of the China's processing exports in 2004.

"China needs to shift up the global value chain," said Karin Finkelston, vice president for Asia Pacific of the International Finance Corporation, a member of the World Bank Group.

In fact, Chinese governments and entrepreneurs have taken action.

In 1993, the textile industry was China's second largest in terms of output after steel production, but telecommunications, computers and other electric equipment became the second largest in 2011, according to Ryan Rutkowski, a China analyst with Washington's Peterson Institute for International Economics.

Finkelston is impressed by the Fuyao Group, a Chinese glass producer now building its own auto glass plant in Russia, after 10 years of selling auto glass to the Russian market. With the Russia's growing appetite for cars, Fuyao decided not just to respond, but to pre-empt the market.

"China has the opportunity to shift from producer to innovator by investing in other emerging markets," said Finkelston, commenting on Fuyao's Russian investment.

China's big names have big global ambitions. WeChat, a messaging smartphone app created by Tencent, has become the world's 10th most popular social network in terms of active users, according to GlobalWebIndex. Available in 18 languages, WeChat is biting into the user base of WhatsApp and Line in many parts of the world.

Lenovo took over Motorola's handset unit in January, nearly a decade after buying IBM's ThinkPad business. The world's largest PC producer is expected to become the world's No. 3 smartphone maker.

The U.S. magazine Fast Company put China's smartphone maker Xiaomi third on a list of the world's most innovative companies, for "reinventing the smartphone business model in the world's largest mobile market." Of the magazine's top 10 for China alone, nine companies are engaged in IT, biotechnology and high-end manufacturing. Fast Company said Chinese enterprises are ahead of the field in spheres such as wearable tech, smartphones and mobile Internet.

"China is redefining its position in the world through innovation, and is inching up in the global value chain," said Liu.

The government will continue to target emerging industries such as new energy vehicles, biotechnology, new materials, high-end manufacturing and energy efficient technology as sectors for future growth, predicted Rutkowski.

Chinese Premier Li Keqiang said last week that China will put innovation at the center and upgrade industries to win an even higher place in the global value chain.

To move up the value chain and deliver more sophisticated finished products, China needs to become an inventor and find fresh ways of delivering services, said Finkelston.

"If done right, this can ensure inclusive growth in China and abroad," she added.

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