Understanding Why China Exports So Much Product

It is no secret that China is the biggest factory globally today. Over the years, the country has developed a reputation and has become the most significant exporter globally. It would help delve deep into it and understand why China exports so many products. The country has built a vast empire based mainly on the manufacturing business. That’s why several products are constantly outsourcing, hence the export superiority. Below, you get to understand why China leads the world in high and low volume product production. 

Business Ecosystem

In most countries globally, you wouldn’t find an ecosystem that works well in China. First, they have ensured that the network is well secured and everyone works in great harmony. For example, you have suppliers, distributors, and government agencies working together here. 

The customers are also involved in the whole ecosystem, and the competition is healthy. This is backed by cooperation and the business acumen of many invested in ensuring it works well in order. The business ecosystem allows everyone to thrive regardless of the sector you’re in. 

Tax and Duties

Like any other country that wants to thrive in business, the tax cost has to match the ambition. And China, looking to become a global powerhouse in the export sector, certainly did its homework. In 1985, there was an export tax rebate policy initiated. The export goods were subjected to zero percentage of value-added tax. Moreover, the sector would enjoy VAT exemption or rebate policy to better the industry. They also ensured that consumer goods were exempted from any import tax, making it much easier for most companies to compete worldwide. 

Lower Compliance

Several standards need to be met in many countries before any product comes to the fore. Some of the compliance that must be met include child labor, involuntary labor, health and safety norms. Unfortunately, Chinese companies don’t follow any of these guidelines. As much as they try to make their workplaces humane, they still emphasize the bottom line. For example, Chinese companies have workers put in longer hours than those in most countries, which is the norm since there are many more people than the work available.  

Currency

One of China’s most significant quarrels with other global powerhouses has been the idea that they artificially depress the value of their currency. As a result, they have an edge in the export field against other goods produced in other areas. What China does is keep the appreciation of the Yuan by buying the dollar and selling Yuan. This has significantly undervalued the Yuan over the years, boosting the export business. In 2017, the then US President Donald Trump threatened to label China a currency manipulator if the Yuan appreciated against the dollar. As a result, there was an 8% increase in that year against the dollar. 

An Export Superpower

There are several reasons why China exports so much globally. These are just a few of the reasons why and it was a move they envisioned earlier on to this stage. It may have taken them 40 plus odd years, but globally, they are the export superpower due to the above factors.