SEARCH searchBY TOPIC
right_division Green SCM Distribution
Bookmark us
sitemap
SCDigest Logo
distribution

Focus: Manufacturing

Feature Article from Our Manufacturing Subject Area - See All

From SCDigest's On-Target E-Magazine

- April 14, 2015 -

 
Supply Chain News: United Nations says China Remains Number 1 in Manufacturing, as US Stays in Second Place, but Share is Shrinking

 

China Averaged Astounding 11% Annual Growth in Units Produced for Past Decade; US saw 1.3% Average Increase

 

SCDigest Editorial Staff

Not everyone agrees depending on their methodologies, but a recent article from MAPI – The Manufacturing Alliance, reporting on data out of the United Nations, said that China remains on top in terms of global manufacturing and has extended its lead.

SCDigest Says:

start

When the MAPI divided total value-add by population size to get a per capita number for leading countries, a different picture emerges.

close
What Do You Say?

 

Click Here to Send Us Your Comments
feedback
Click Here to See Reader Feedback

Based on measuring total manufacturing "value-add," the UN says China first over took the US in 2010. Value-add means, for example, that if material for an apparel item costing $3.00 is sent to China for sewing, and the China factory then sells the item for $7.00, it gets a $4.00 value-add for each piece sold. (There are other factors in the calculation, as descried below).

China's manufacturing value-add reached $2.74 trillion in 2013 compared with $2.03 trillion for the United States. That gave China a global manufacturing share of 23.2% for the year, versus 17.2% for the US.

In 2010, China global share was 18.9%, just ahead of the US at 18.1%.

China's ascent has simply been remarkable. Its rise in actual physical volume - the number of things it produces - rose at a compound annual growth rate of a robust 11% from 2003 through 2013. At that 11% growth rate, it means China is doubling its production unit volume every seven years. When combined with other factors in the calculation, it means China is doubling its value-add every four years, an unbelievable pace.

By comparison, US unit output rose just 1.3% annually during the same period.

Several other emerging economies rose in the ranks; Korea jumped from 10th to 8th to 5th from 1993 to 2013 to 2013. From 2003 to 2013, India rose from 14th to 11th, Russia rose from 18th to 8th, and Indonesia rose from 19th to 13th. Mexico, however, actually fell one position in the rankings, to 12th place.

The table below from MAPI shows the rankings based on global percentage of total value-add for 2013, and then how the countries stacked up by the same measure in 2003 and 1993. We were frankly a bit surprised to see China was ranked as high as fourth all the way back in 1993.

 


Another table from MAPI shows the components that go into the calculations of the value-added total, as well as the physical volume CAGR from 2003 through 2013, for the top 15 manufacturing nations.

 

Korea saw a strong 8.6% annual rate of growth in manufacturing value-added over the period, with physical volume rising at 6.0% annually.

India's value-added grew 10.5% a year during the period. The composition of that annual dollar-based growth was 5.4% inflation, 2.3% currency depreciation, and a strong 7.3% growth in physical volume.

Brazil's growth came mostly from inflation. Manufacturing value-added increased 11.2% a year over the period, composed of 4.9% inflation, 3.6% currency appreciation, and a relatively modest 2.3% increase in physical volume.


(Manufacturing Article Continued Below)

 

CATEGORY SPONSOR: SOFTEON

Learn More about Softeon's Innovative Supply Chain Solutions

 


Per Capita Measure Paints Different Picture

While the US has fallen behind China in terms of total manufacturing value-add, China's population is some four times that of the US.

When the MAPI divided total value-add by population size to get a per capita number for leading countries, a different picture emerges.

Of the top 15 manufacturing countries, the two most manufacturing-intensive and productive are Germany ($9,008 per capita) and Korea ($7,519). Japan ($7,211) ranks third and the United States ($6,338) is fourth.

On this measure, China ranks 10th, with a value-added per capita of $1,978 per person.

MAPI has some interesting comments on the factors behind China's rise, noting that "[Chinese] officials use their authority to limit market entry into the country as a way of both extracting technology transfer from multinational corporations and skipping generations of technology development by importing the latest advancements from high-income economies."

It adds that "Through the administration of controls that regulate financial flows in and out of the country and funnel consumer savings into low-interest accounts at state-owned banks, Chinese authorities are able to trap domestic savings inside the country and maintain an undervalued currency to support the export-oriented manufacturing sector."

That said, China's manufacturing growth rate has started to slow a bit, and China's plan to switch from an export led economy to a consumer-driven one will be full of challenges, MAPI says.


Any reaction to these global manufacturing numbers? Let us know your thoughts at the Feedback section below.

Recent Feedback

 

No Feedback on this article yet

 

 
.
.