General

Last year, China's international trade exports of electric vehicles increased by 131.8%, photovoltaic products by 67.8%, and lithium batteries by 86.7%. Represented by the "new three types" of electricity, light, and lithium, China's high-tech, value-added, and green transformation leading products are becoming new growth points in international trade exports, which is undoubtedly encouraging. But it can also trigger curiosity: How is the performance of traditional export industries? In today's fierce international competition and the ascendant of industrial transformation and upgrading, can they still keep up with the pace of the times and maintain a long-term stable contribution in the foreign trade pattern?

Generally speaking, traditional export industries mainly include labor intensive industries represented by seven categories: clothing, textile products, furniture, shoes and boots, plastic products, luggage, toys, etc. Although the proportion of various labor intensive products in China's goods exports has declined in recent years, it still accounted for 17.9% last year. In addition, China's other traditional advantageous export industry - mechanical and electrical products account for half of China's goods exports, which also covers diversified products at different levels. Over the years, China's foreign trade has continuously formed new growth points. At the same time, traditional advantageous industries are also continuously improving their quality and upgrading, which remains the foundation for China's stable position as the largest country in global goods trade.

The word "foundation" has its historical background. At the beginning of reform and opening up, China's foreign trade started with OEM and "three processing and one compensation", relying on China's rich labor resources and relatively low cost advantages. The so-called "three supplies and one compensation", namely, "processing with supplied materials", "processing with supplied samples", "assembly with supplied parts", and "compensation trade", is a trade method in which the foreign party provides equipment, raw materials, samples, etc., and the Chinese party provides the construction site, factory buildings, and labor force. The production, processing, and assembly are organized according to the foreign party's requirements. The entire product is exported, and the Chinese party collects processing fees. In the early stage, the development of labor intensive and resource intensive industries took full advantage of China's resource endowment, and the export pattern of labor intensive products such as the "seven major categories" was also formed. It can be said that China has started from the low end of the global supply chain, striving all the way to become the world's second largest economy, the largest trading country in goods, and the world's largest market.

From a development perspective, the traditional export industry has already changed. From clothing, footwear, luggage, to mobile phones, home appliances, there has been a significant leap in design, quality, technology, brand, and other factors. The "gold content" of Chinese manufacturing is greatly different. The labor-intensive industries of the past have also begun to transform into technology-intensive industries. Of course, the transformation is not overnight, but is achieved by accumulating over time. Why transform? On the one hand, domestic labor costs are rising, and domestic enterprises are facing competitive pressure from manufacturers in Southeast Asia and other places; On the other hand, more and more mature Chinese enterprises have realized that they always follow the past model of development, and they are constrained by others and can only earn small profits. Only transformation and upgrading, and improving product added value, is the way to survive and develop. A large number of Chinese international trade enterprises have proven this through the past 10 or 20 years of practice.

Although there have been achievements, the challenges remain. Currently, the international environment for the development of foreign trade is quite severe. How can traditional export industries be further consolidated and improved?

The most important thing is to transform the advantages of foreign trade development - from winning by price in the past to winning by quality, technology, service, brand, and standards. From the perspective of cost performance, price is the denominator, and performance is the numerator. The top priority is to constantly become a big molecule and improve product competitiveness. For enterprises, this means more advanced management concepts, more investment in research and development and technology, a more international perspective, more proactive research and development of international trade markets, and more complete after-sales and service

When it comes to traditional export industries, especially labor intensive industries, industrial relocation is an unavoidable topic in the public opinion field. Some enterprises have transferred some production lines, which does not violate the law of international industrial division of labor. In the past few decades, the international industry has shown a trend of "the United States Japan Asia 'Four Little Dragons' - Chinese Mainland". Now, with the transformation and upgrading of China's industry, the international division of labor continues to evolve. The migration of individual enterprises is very common, but does not represent the mainstream.

On the other hand, more enterprises are unwilling to leave China and further invest in and cultivate China. According to the "2023 China Business Environment Survey Report" released recently by the American Chamber of Commerce in China, 74% of member companies stated that they have no plans to transfer their supply chain out of China, and emphasized their commitment to deeply cultivate the Chinese market. The reason is simple. It is because China has the most complete industrial system in the world and a super large market, and its advantages are irreplaceable. According to data, there are hundreds of thousands of enterprises in China that have passed the ISO9001 quality management system certification, with a significant global advantage. Individual companies have shifted some of their supply chains, but many key components still need to come from China.

Today, our traditional export industry still needs to have confidence and courage to make its advantages bigger and stronger. China is a large country with a population of over 1.4 billion. China's national conditions determine that traditional labor intensive industries will not be lost in the short term, nor can they be lost. In this sense, stabilizing foreign trade means stabilizing employment and consumption. However, developing tradition does not mean following the beaten track. Only by improving quality and upgrading, and opening up international trade markets, can the road become wider and wider.