Can trump successfully call the manufacturing industry "go home for dinner"
"China has a complete industrial chain unmatched by other countries and regions, which is a strong backstage support for foreign trade enterprises," said the general manager of Shenzhen Qianhai Weiwei Xinke Co., Ltd. His company is engaged in nano glass touch technology and high-end hardware manufacturing industry
recently, the policies of US President elect Donald Trump to adjust corporate income tax, reduce manufacturing costs and guide enterprises to return have attracted great attention of global economies. However, many people in the manufacturing industry agree that even in the face of the pressure from the west to revitalize the manufacturing industry, it is difficult for the manufacturing industry to return to the United States violently due to industrial chains, markets and other factors
once Trump's tax cut policy of attracting manufacturing industries to "eat at home" is "booted", it may trigger a "global tax cut competition", but it will not trigger a "return wave" of enterprises for the time being. Because in the context of economic globalization, tax is no longer the decisive factor to attract enterprise investment. China can respond by continuing to optimize the business environment, increasing tax cuts and fee reductions, and reducing the comprehensive costs of enterprises, so as to escort the development of the real economy
I. how does the "trump tax cut" produce a siphon effect
in order to increase American jobs and attract the return of manufacturing industry, US President elect Donald Trump said that the corporate income tax would be significantly reduced and the current income tax would be reduced from 35% to 15%. In addition, the tax rate of multinational companies' overseas income was reduced to 8.75%, which prompted a large number of overseas funds to return to the United States; American enterprises that move their factories to other countries will face import tariffs of 35%, which will increase the financial costs of enterprises leaving the United States
in fact, it is a common practice of all countries to attract overseas investment and stimulate domestic economic vitality by reducing corporate income tax. Ni Feng, deputy director of the American Institute of the Chinese Academy of Social Sciences, believes that if the tax reduction policy is really established, a substantial tax reduction may attract many enterprises in the United States that have fled for the purpose of tax avoidance to return to the mainland
those who favor the U.S. tax reduction policy and make migration are mainly concentrated in some industries, such as infrastructure, steel, petrochemical, etc. However, labor-intensive industries and technology intensive enterprises are in a wait-and-see state. Data from EPFR, a capital flow monitoring agency, also showed that stocks and funds in industries related to trump's policies had a large amount of capital inflows, and infrastructure stocks showed an upward trend. The general view is that enterprises that are sensitive to tax may return to the United States to invest after the tax rate is reduced
according to Liu Bin, director of the Institute of world economics at Dalian Maritime University, the impact of the tax reduction policy on China needs to be considered in many ways. "Because most of the manufacturing industries that the United States may drain back to China are concentrated in capital intensive and technology intensive industries, such as aircraft, automobile, semiconductor, etc., which are mainly distributed in Europe and Japan. At present, there is a cross between China and the industries that the United States wants to drain back, which are relatively dominated by consumer goods. This part of the United States has no advantage in cost and is unlikely to return."
as a company integrating R & D, design and processing, the Export Director of Foshan Kawa Electronic Technology Co., Ltd. believes that, "We feel that the impact is relatively small. First, our core competitiveness is our design ability and differentiation, which we do not lose even compared with our counterparts in the United States. Second, for the whole environment, the international division of labor has been so long, and it cannot be changed immediately by Trump's tax adjustment alone."
second, what cards do China have
the dynamic changes of manufacturing costs will, to a certain extent, prompt enterprises to reassess and select manufacturing bases, leading to the migration of the global economy. This means that manufacturing enterprises will consider multiple factors and readjust their layout. China's low cost, huge skilled workers, convenient processing, transportation, sales and other factors make China hold more cards in the global layout adjustment of manufacturing
from the perspective of internal factors:
first, labor cost is still one of the important factors affecting the return of manufacturing industry, and China's huge skilled labor group is not available in the United States
Guangdong maiska sporting goods Co., Ltd. is a company that makes sporting goods and sportswear. The person in charge said, "At present, the income level and living habits of the United States make it difficult for Americans to become workers again, and the rapid return of manufacturing is impossible. Moreover, the labor cost of the United States is quite high. Like NewBalance shoes, the cost of making pp/epdm.t15 or pp/epdm-t20 is about twice that of making in China, which has no price advantage in mass production."
second, as a "world factory", after decades of accumulation, the gap between China's machinery and technology level and the United States has become smaller and smaller. Moreover, a large number of high-level labor is also a highly competitive aspect
the person in charge of Dongguan Ruitai Textile Co., Ltd. combined with our own experience, you can rest assured that in China's relatively advantageous industries, after decades of accumulation, the mechanization level will not be lower than that of the United States. "When the level of textile and other machinery is similar, the technological level of clothing cutting and other processes of Chinese labor force is more advantageous than that of the United States, which has transferred such industries for decades. Moreover, the United States has no advantage in the cost of textile raw materials."
the general manager of Zhuhai Sanchuan industrial automation equipment Co., Ltd. emphasized that a certain level of technology is needed, especially for the manufacturing of some precision parts and the operation of CNC machine tool production lines. The cultivation of high-level workers cannot be achieved overnight, because it is also a strategic factor in the layout of relevant manufacturing enterprises
third, the return of many manufacturing industries needs to start from scratch. It takes a long process to build the technical foundation of experience equipment. In the short term, China will not be affected by too much industrial withdrawal. Ni Feng, deputy director of the American Institute of the Academy of Social Sciences, said, "there is still a certain distance to achieve the integration of words and deeds in the tax relief policy. Enterprises that set up factories in China will also measure the investment and profits of employees, plants and production equipment, as well as whether taxes can be made up for, etc., so the return of the manufacturing industry essentially depends on enterprises. Whether it is necessary or when to migrate should be measured from the perspective of comprehensive income."
considering the external environment, the "comparative advantage" of the complete and convenient industrial chain and sales chain of made in China is obvious
the order of international division of labor and regional industrial chain will not be suddenly unbalanced by Trump's tax policy. Especially for large multinational companies, the supporting supply chain and comprehensive costs involved behind them can not be compensated by the reduction of income tax
in addition, for enterprises, foreign exchange control, finance, market system labor, religious culture and other factors need to be comprehensively considered in deciding whether to invest. Many entrepreneurs have told the author that enterprises choose to set up manufacturing plants or OEM factories in China not only because of their cheap labor, but also because many businesses in the industrial chain and sales chain are carried out in roughly the same region
it is not easy or economical to rebuild a factory in the United States. If the manufacturing industry is to return to the United States, what trump needs to move back is the entire industrial chain, not a separate company. It requires too many people's cooperation and early-stage investment, and tax alone is impossible
three, how to "escort" the real economy
the change of cost competitiveness has a great impact on the strategic layout of manufacturing enterprises operating globally. China can do a lot, grasp the opportunity, improve labor productivity, further reduce taxes and fees, optimize the business environment, and develop and expand the real economy
first, we should further improve productivity. With the improvement of China's economic development level, the huge wage gap with developed countries is narrowing, and the demographic dividend is also disappearing. Improving labor productivity has become an important factor in gaining global manufacturing competitiveness. It is crucial to further improve the level of industrial automation, strengthen the innovative research and development of relevant mechanization, and truly realize "made in China"
secondly, we should further optimize the business environment. Relevant regulatory departments and policy makers should be based on serving enterprises, maintain communication with enterprises, reduce business difficulties and provide supporting construction of software and hardware. Li Jian, director of the Institute of international trade and economic cooperation of the Ministry of Commerce, said that once the industrial chain of manufacturing industry is generated, it can not be easily transferred. The low-end manufacturing industry has a high sensitivity to tax and human costs, but the industrial chain combined with high-end manufacturing cannot be easily transferred. As long as China responds appropriately and continues to create a better business environment, it is fully capable of coping with the western trend of "rejuvenating manufacturing"
thirdly, we should further reduce taxes and fees, especially to vigorously clean up "disorderly fees". A senior person once told the author that most American enterprises in China are large-scale enterprises, and many are high-tech enterprises. The tax rate has been maintained at about 15%. Even if the United States reduces taxes, it is unlikely that these enterprises will withdraw immediately. "The efficient service capacity of Chinese government departments and the constantly improving business environment are attracting enterprises at home and abroad to invest."
some partners of accounting firms visited enterprises in the Pearl River Delta region and found that the tax burden imposed by the state is affordable for enterprises, and enterprises are annoyed by the "indiscriminate fees" hidden behind various statutory taxes. For example, labor union fees, disability employment security funds, etc., which have been collected for many years, have brought a huge burden to enterprises. Is it possible to further reduce costs and let enterprises go to battle with light equipment
in addition, Liu Bin also believes that Trump's tax reduction policy is actually a double-edged sword. "If the tax reduction policy really kicks in, the US manufacturing industry will leave a lot of room for the Chinese market at the same time. On the basis of decades of accumulation of China's manufacturing level, Chinese enterprises can enhance their own strength, layout more domestic markets, expand domestic demand and enhance endogenous power."