Manufacture Product Or Import From China? – With One Child Or Two?

If only China knew decades ago of its future explosion in the global marketplace, it surely would hot have implemented a one-child policy as they have done over the past decades. Now Beijing is faced with a huge demographic challenge.

With the explosion of trade with China, business is booming and needless to say, every other product today is manufactured or “Made in China”. But China is faced with a shrinking workforce in the urban areas. Their long-standing one-child policy is now making life difficult for China but it is not too late to reconsider the policy for future growth.

China’s one child-policy has worked very well in the past. If we consider that China has a population just under half a billion, it is pretty impressive that this policy has kept the Chinese people out of full poverty. We have to give the policy its credit. It did serve its purpose.

Since China has become a key player in the product manufacturing and import/export world, it is an economic reality we have to be aware of. If the one-child/family-planning policy is reviewed soon enough, it could help China with this demographic challenge, while it is still a leading force in global product manufacturing. The concern of its demographic challenge does not only touch the manufacturing industry, but it is a reality all over the economy. If the economy keeps growing so rapidly, a shrinking workforce is surely not your friend.

The one-child policy was introduced in 1979 and it became a local government legislations. In urban areas the one-child policy was strictly enforced, but in rural areas if the first born was a girl for example sometimes a family could have anther child. This was mainly because social services were not provided in rural areas.

China finds itself now with an above average age in its workforce and the majority of its workforce is made up of the elderly. In regions like Guangzhou labor costs have been increasing while maintaining a shortage in labor. Labor cost specifically in manufacturing has been slowing increasing and have been a concern for investors. If nothing is done to China’s family planning policy, this trend if increasing labor cost will continue and investors will look else ware for their manufacturing needs.

All of this said, we still are very excited about the Chinese economy and manufacturing industry. China has become a leader in global manufacturing and if they do the right things soon enough will continue to lead in these realms.

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