Why electronics in China - a business perspective

Since China opened up in the late 70s and the early 80s, the low labor cost of Chinese workers have attracted many electronics companies from around the world to set up their factories there or to sub-contract their products to Chinese manufacturers. This has earned China the nickname, "the World's Factory". One can find many products around the world wearing the "Made in China" label. Initially, Chinese industry only took on product assembly and simple development jobs. Consumer items such as radios, calculators, and electronic toys were typical of "Made in China" products at that time. Most of the research and design activities were conducted elsewhere. Most components used in assembly were pre-made and shipped to China. Only simple components were sourced locally. At that time, most of the products manufactured by foreign enterprises were exported. The Chinese market was protected by high tax rates and very few Chinese could afford foreign-made products. This trend, however, has changed fundamentally in the last ten years. The Chinese economy has improved dramatically, experiencing double-digit growth every year. The standard of living for Chinese citizens in the major cities and the surrounding areas has improved substantially. This rise in income has opened up a huge consumer market. Foreign investment in the Chinese market is increasing. Many multinational companies have moved their critical component manufacturing sites to China. More and more international companies have set up major research and sales center in this high-potential market. Having entered the WTO, China now has become one of the most important electronics markets in the world. Its role in the electronics business has evolved from simply assembling products to research and development, component procurement, marketing and sales.