China should not only maintain its status as a manufacturing power, but also consider getting out of the middle-income trap and climbing up the industrial chain. It is necessary to abandon the cost-first competitive strategy, on the one hand, appropriately increase residents' income, on the other hand, reduce direct government investment, create good conditions for private sector investment, and increase the proportion of private institutional investment.

It is a flat-bottomed sphere, and the LED light strips surrounding it can flash with the music you play, creating psychedelic colors in your living room. This is the Nexus Q launched by Google this year, and it is really cool. However, the most interesting content lies in a line of text on the fuselage. There is a short inscription at the bottom of the Nexus Q: "Designed and manufactured in the United States."

Nexus Q can connect a TV or home audio system to cloud computing services to play video and audio content, and almost all of its components are made in the United States. This device uses the same microprocessor as an Android smartphone and also contains 7 printed circuit boards. The engineers responsible for the development of the device found a zinc metal base manufacturer in the Midwest of the United States and a plastic parts supplier in Southern California.

Google executives and engineers said they hope to give the American manufacturing industry a try through this experiment. "We haven't manufactured products in the United States for too long. So we thought, "Why not try American manufacturing and see what happens?" said Andy Rubin, head of Google's Android team.

In recent years, in response to China's hollowing out of industries and high unemployment, the United States has signaled a strong return to manufacturing. In April 2009, Obama first proposed the strategic concept of revitalizing the manufacturing industry in his speech at Georgetown University, and in December of the same year, he announced the "Framework for Revitalizing American Manufacturing." On June 26, 2009, a series of bills including the "Clean Energy and Security Act" and the "Manufacturing Promotion Act" were promulgated to build a legal framework for revitalizing the manufacturing industry. In June 2011 and February 2012, the "Advanced Manufacturing Partner" program and the "National Strategic Plan for Advanced Manufacturing" were launched successively, with smart grids, clean energy, advanced automobiles, aviation and space capabilities, bio- and nanotechnology, new generation robots, and advanced materials as key development areas to seize the commanding heights of advanced manufacturing in the 21st century.

Cost-driven choice

Since the 1990s, a large number of American factories, such as HP, Dell, and Apple, have begun to shift their focus to design and marketing, while transferring manufacturing operations to contract manufacturers in Shenzhen, China and other places. Today, this trend seems to be beginning to show early signs of reversal.

The most important consideration for many companies to relocate their factories is still cost factors, but it is not limited to this. Harold Silken, general manager of Boston Consulting Group, who is optimistic about this return trend, believes that it is impossible to move the workshop back to the United States when the wage is $0.58 per hour, but now the wage in China's coastal areas is $3-6 per hour, "the equation has changed instantly." A report released by Boston Consulting Group shows that in the past five years, the annual average increase in the full-load cost of workers in the Yangtze River Delta region, which includes Shanghai, Zhejiang Province and Jiangsu Province, is 18%, equivalent to an hourly wage of $6.31. In 2000, the average hourly wage of workers in the Yangtze River Delta region was only 72 cents, while the hourly wage of workers in the southern United States was $15.81. Now it seems that with the development and growth of trade unions and the improvement of labor laws, the growth trend of labor remuneration will continue to accelerate.

Relatively speaking, the labor advantage of the United States has begun to improve. Due to high unemployment rates and weakened trade union power in some southern states of the United States, labor costs have decreased, and American workers have advantages in the use of machines and automation.

Labor costs are only part of the factors that affect changes in manufacturing costs. Other factors include electricity and industrial land costs. In fact, the commercial price of industrial land in China is much higher than that in the United States. In order to ensure low land costs, manufacturing companies need to move their factories to the mainland, but this move will inevitably lead to higher transportation costs and the loss of the industrial cluster advantages that have been formed in major coastal cities. For engineers, it is more convenient to drive to the factory on the highway for 10 minutes than to take a 16-hour flight. In addition, the increase in ocean shipping costs and the appreciation of the RMB are also two important factors that have led to challenges for China's manufacturing industry.

Finally, it must be noted that for manufacturing companies, extending the supply chain will definitely lead to a series of problems such as inventory expenditure, quality control, unpredictable travel needs and supply interruptions. In addition, the frequent intellectual property and trade disputes have also made many multinational companies worried.

And more and more companies are moving production back to their home countries or increasing investment in the United States and China, which is of course good news for Obama, who is eager to revive the manufacturing industry and create more jobs. Obama has repeatedly emphasized the importance of manufacturing to the "longevity" of the US economy. As the highlight of economic recovery and the core of revitalizing the real economy, "Made in the USA" is highly expected before the US economy finds a new growth point.

To this end, Obama urged Congress to give companies that recruit and invest in the country a 20% tax break, and announced a series of policies to promote exports. The US government's fiscal year 2013 budget plan also increased funding for manufacturing R&D and trade promotion agencies.

New technology drives the trend

In addition to cost, technology has played an important role in this round of manufacturing returning to the United States.

The first one to make a great contribution is robotics. Today, robots are no longer like humanoid machines that appeared in science fiction movies in the past, but professional electromechanical equipment remotely controlled by software. With the continuous power of computers, robots are capable of performing surgery, milking cows and military reconnaissance, and flying fighter jets is not a problem. Taiwan's Foxconn Group, a global foundry giant, announced in August 2011 that it would introduce 1 million robots to replace workers within three years.

The second is artificial intelligence (AI) - software will make computers very smart, even if not as smart as the real "human brain", at least comparable to it in some aspects. AI technology will be integrated into manufacturing and make it more "human": we can design our own products at home with the help of AI design assistants. In the future, there will be a "creator economy", in which mass production will be replaced by personalized production, and people will download designs from the Internet and modify them, or simply design them themselves. We can "print" these designs into products at home or in public manufacturing workshops.

The third is 3D printing technology. It uses metal solutions, plastic droplets and other materials to make products, just like laser printers use ink. Its manufacturing process does not require any mechanical tools or devices, does not produce any waste, and does not increase costs due to the complexity of the product. 3D printing technology has now developed maturely enough to make mechanical equipment, medical implants, jewelry, and even clothing. It is entirely foreseeable that in the next decade, 3D printers will be able to make electronic products, and giant 3D printers can even "print" entire buildings.

The fourth is new materials. Engineers and scientists are studying new materials, such as carbon nanotubes, ceramic-based nanocomposites and new carbon fibers. These new materials can be used to make stronger, lighter, more energy-efficient products that last longer than current industrial products. The new field of "molecular manufacturing" will go a step further, and the cost of arranging molecules at atomic precision will be even lower.

All these technological advances will be rapidly developed and widely used, enhancing the ability of American industry to continue to innovate. In this regard, the US media commented: "The manufacturing jobs we need to do today are different from the jobs we sent overseas back then. These jobs require very special skills and fewer workers." Michael Spencer, a professor at New York University and a Nobel Prize winner in economics, said: "We will not increase labor-intensive, relatively low-skilled jobs in the United States, and I don't think we want them."

How China responds

Of course, if the repatriation of American manufacturing is viewed in the larger international macro environment, this process is still in its early stages, and there are differences between different industries, which are affected by many factors such as the proportion of labor costs, transportation factors, the comparative advantages of various countries and corporate business strategies. For example, Nexus Q is priced at $299, much higher than similar products from Apple. Google admitted that manufacturing in the United States is one of the reasons for the high price.

Jin Xiaobing, president of MFG.com, the world's largest online manufacturing procurement platform, told reporters that the "repatriation" of American manufacturing is just a strategic adjustment for the long-term development of enterprises and does not represent the general trend of the entire industry.

According to Jin Xiaobing, MFG has found through exchanges with many overseas manufacturing companies that most of them have no plans to move their factories and procurement projects back to their home countries. "Some American companies even said in their communication with me that their procurement projects in China will increase and the factories they have opened will start operation immediately. A German company also said that even though China's labor costs and raw material prices have risen, price is not their ultimate goal. They chose the Chinese market because they valued China's relatively complete industrial chain."

MFG's recent survey statistics on coastal areas, especially cities with active manufacturing industries in East China and North China, showed that most suppliers and manufacturers received more orders in the first half of the year than last year. Eighty percent of members said that there was an increase of about 30% over last year, and many members said that profitability would be better in the second half of the year, and marketing investment in the export market would also increase.

However, this does not mean that we can sit back and relax. Experts suggest that China should not only maintain its status as a manufacturing power, but also consider getting out of the middle-income trap and climbing up the industrial chain. It is necessary to abandon the cost-first competition strategy, on the one hand, appropriately increase residents' income, and on the other hand, reduce direct government investment, create good conditions for private enterprises to invest, and increase the proportion of private institutional investment. In addition, increase the proportion of the service industry, diversify development, and reduce the systemic risks that may be brought about by over-concentrated manufacturing. In addition, financial markets should be fostered for innovation and manufacturing upgrades, and the opening of capital and financial accounts should be accelerated. Of course, China and the United States need to find more opportunities for win-win cooperation and mutual promotion in the manufacturing industry.

Link "Century-old Shop" Returns to Hometown

As early as the 1930s, the Cochran family opened a furniture factory in Lincolnton, North Carolina, manufacturing tables, chairs, etc. In 1936, the factory employed 25 workers. By 1982, at its peak, the Lincolnton Furniture Factory had more than 1,000 workers. However, by the 1990s, the factory's business was going from bad to worse. In 1996, Bruce Cochran sold the factory and went to China to work as a consultant for furniture companies. However, about a year and a half ago, Cochran returned to his hometown and reopened his Lincolnton Furniture Factory in a warehouse that his family had used. He invested $5 million and employed 130 workers to manufacture solid wood furniture. At the end of January this year, the first batch of furniture was shipped.

Small and medium-sized enterprises are quick to respond

Those that have moved their entire production lines back to the United States are often small companies. The American media has repeatedly cited a company called Light Saving Technology, which recently moved its entire production line back from China, but the company is a small company with 10 to 25 people. Someone tried to call the phone number on the company's website, but the number was no longer in service.

Another company, Suarez Corp., is a company that makes space heaters. After moving back to the United States from China, they added 250 jobs to the United States. However, due to oversupply in the market, they recently laid off about half of their workers.

Giants are also taking action

In September 2011, Whirlpool announced that it would move the production of its KitchenAid brand hand mixers back to the United States. A company spokesman said: "This product is sold in the United States. Moving the assembly business back to the United States will allow Whirlpool to respond to customer needs more quickly. For example, if a color suddenly becomes popular, the company can quickly provide the market with a blender of this color." However, many parts of the hand blender, including the engine, are still produced in China. Plastic parts produced in the United States will also be produced using equipment purchased in China.

In early June this year, European aircraft manufacturer Airbus announced that it would establish an Airbus A320 series aircraft assembly line in Mobile, Alabama, USA. This will be Airbus's first assembly line in the United States. Alabama was chosen because workers here do not need to join a union as a prerequisite for employment.

In recent years, these industry giants, including Caterpillar and General Electric, have also begun to quietly return to the mainland and transfer some of their assembly business back to their home countries. Ford Motor Company has also gradually withdrawn some jobs from China, Japan and Mexico, and plans to invest $160 billion in the United States in the next five years by 2015; Intel and IBM and other companies plan to jointly invest $4.4 billion to establish a semiconductor research and development center in New York.

Lenovo changes with the times

Lenovo Group recently announced that it will open a factory in Whitsett, North Carolina, to produce personal computers. Lenovo's US factory will mainly produce Think brand laptops, desktops, tablets, engineering workstations and servers, and is expected to create 115 new manufacturing jobs in North Carolina.

It is reported that the construction of the US personal computer production line is Lenovo's latest strategic investment plan. In the past two years, Lenovo Group has invested in new factories or manufacturing joint ventures in China, Brazil, and now in the United States to produce personal computers and mobile Internet devices such as smartphones.

According to Lenovo executives, the US production line will produce Lenovo's latest products, such as the recently announced ThinkCentreM92p desktop and ThinkPad second-generation tablet computer. The production line is currently under construction and is scheduled to be put into operation in early 2013. The new production line will be located near Lenovo's US headquarters, and Dell's last US factory closed in 2010 is also not far from here.

Lenovo's global supply chain director said the decision to build a factory in the United States is in line with the company's overall strategy to localize production in major markets as much as possible. "We are now large enough in the United States to support this move." Lenovo believes that having local production capacity in the United States will enable flexible supply to American corporate customers and better respond to product customization needs. (Reporter Zhang Xiaoming)

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