Overcoming the challenges for manufacturing companies operating in China-APAC region
One thing is certain, the China-APAC region represents a huge opportunity for manufacturing companies. But to make the most of it, you need to be aware of the challenges it presents and how to address them.
diversification may become problematic for countries in the future - especially in terms of global supply shortages and unstable supply chains. China would like to avoid such a situation for itself and is therefore - as Made in China 2025 demonstrates - increasingly relying on production in its own country. However, as rapidly as the Chinese manufacturing industry has grown, it is still has its shortfalls. In the past, the main focus was on large-scale production. While the focus on quantity used to be a clear competitive advantage, it is more problematic in times of increasing quality and sustainability awareness. Chinese industry has recognised these issues. However, the move towards quality-oriented manufacturing is proceeding at a slow pace. Compared with other advanced manufacturing nations such as Germany, Japan and the USA, China is also falling behind in the areas of efficiency and structural optimisation. For instance, the situation with skilled workers where in a survey from 2017, 52% of the participants stated that skilled workers in China had only limited opportunities for further development. 29 More than one- third also said that professionals lacked qualifications and skills. One reason for this is that training and studies in the industrial sector in China often cannot keep up with Western quality standards. In addition, academic professions are generally held in higher esteem in China than technical ones
and are therefore more attractive for qualified young people.
Benefiting from the European-Chinese partnership
For European manufacturing companies, this presents an opportunity to profitably contribute their expertise and position themselves in the Chinese market. Not only does China welcome the quality of European industrial products; China is also the EU‘s most important trading partner. With an import and export volume of 586 billion euros, European-Chinese trade accounted for a full 16% of the EU‘s total trade in goods in 2020. 30 Accordingly, the European Union is working hard to ensure fair competition in China. For example, the Comprehensive Agreement on Investment (CAI) negotiated between the EU and China since 2013 is intended as a first step towards opening up the market. Among other things, this agreement provides for a ban on forced technology transfer and requirements for state-owned enterprises to conform to market standards. In addition, China committed itself to opening its own markets as early as 2001 in the course of its accession to the World Trade Organization (WTO) - a lengthy process that is still ongoing but offers good prospects for European companies in the future.
#1 Challenge: Culture and Language
China is a country steeped in tradition that is proud of its millennia-old culture. Chinese influence is also still evident in many other countries in the APAC region, especially in language, cuisine and customs in neighbouring countries. At first glance, the rich cultural layer as well as common bias may be unsettling. The worry of offending in tone or hurting cultural mores is a common concern in contact with foreign partners - especially who are far away in the APAC region. The language barrier poses an additional challenge. After all, in the manufacturing industry, very precise communication and mutual understanding are essential. The Chinese language family in particular, with its many different dialects, tonal pronunciation with a few exceptions, and use of written characters, is structured quite differently from European languages. This also applies to many other languages in the region: complex writing systems are found in Thai and Japanese, for example, and tonal languages are spoken in Vietnam and Laos, among others. Although more and more people in the APAC region are learning English, you should not take it for granted that your counterpart speaks the language.
Exceptions are countries like India, Malaysia or the Philippines, where English is an official secondary language and therefore more widely spoken.
29 - https://www.imove-germany.de/de/alle_news/China-Fachkraefte-in-der-Gesellschaft- unterbewertet.htm
30 - https://www.destatis.de/Europa/DE/Thema/Aussenhandel/EU-Handelspartner.html
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