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Chapter 1178: Scope Expanded
Chapter 1178: Surprises Await as the Scope Expands - Click to Unlock Now.
While this online debate was still ongoing, renowned financial columnist Geng Xiubo forwarded and commented on Huang Xiaochuan's article in his column.
He wrote: "I have been talking about the transformation and upgrading of Chinese manufacturing recently. A few months ago, I wrote an article titled 'Buying a Toilet Seat in Japan,' which sparked a discussion. The core point is that our consumers do not just want cheap products; they want good products and are willing to pay for good quality."
Huang Xiaochuan's article explains the principles very clearly from an economic perspective: the low-price model is destined to be unsustainable. In my opinion, the phrase "cheap and good" has, to some extent, delayed Chinese manufacturing for too long. Good products must have good prices, good prices lead to good profits, and good profits lead to good innovation. This logical chain is very reasonable and interconnected, and it cannot be broken.
Geng Xiubo's repost gave Huang Xiaochuan a lot of endorsement. His fan base is quite large, and many people who don't usually pay attention to academic discussions also saw Huang Xiaochuan's article because of it.
Meanwhile, a speech titled "Should Export Enterprises Relocate or Transform?" by Jiang Qiming, a renowned domestic economist and dean of the School of Economics at Shenzhen University, which he attended at an economic forum, was also unearthed by netizens, who linked the speech with Huang Xiaochuan's article for discussion.
Jiang Qiming's view is that China cannot maintain high-speed growth indefinitely. This is related to the country's economic position in the international market. Moreover, the foundation and starting point for going from 0 to 100 are different from those for going from 100 to 200. The high-speed growth in the past was because China basically started from scratch. After so many years of development, it is naturally impossible to maintain such a high growth rate as before.
Therefore, the slowdown in export growth is an inevitable trend, and companies have reached a point where they must make choices.
Of course, there is support as well as opposition. A few days later, one afternoon, a rebuttal article titled "Defending Low Prices" appeared in a well-known financial media outlet.
The author of the article is a researcher at a local economic research institute, who refuted Huang Xiaochuan's views from several aspects.
First, in terms of national conditions, with a market of over a billion people, industrial upgrading cannot be generalized. The economies of many county towns are supported by the meager profits of light industry. A large number of local jobs and tax revenues depend on these small and medium-sized manufacturing enterprises that are struggling to survive in fierce competition. If these enterprises all move towards the mid-to-high end, where will ordinary workers with only basic labor skills find employment?
Secondly, the author uses German manufacturing as an example. Although German manufacturing is said to follow a high-end route, there are also a large number of companies in Germany that make ordinary products. This shows that not all German companies are high-end manufacturers.
Third, the author cites some macroeconomic data to argue that the PPI has been negative for several consecutive months, and domestic demand was already weak. If companies raise prices, it will further suppress the already sluggish market demand. Therefore, maintaining low prices and good quality is the key to boosting domestic demand at present.
To be honest, the article is written in a calm tone, and the words convey a sense of maturity. It doesn't sound like an argument, but rather like a gentle rebuttal.
This article, titled "Defending Low Prices," was widely shared, sparking a lively discussion online. Those who had previously supported low prices seemed to have gained a theoretical weapon and began to share and support it.
The two viewpoints each occupied half of the forum, clearly divided.
That evening, Huang Xiaochuan sat in his study, watching the heated debates online. Ever since he posted his article online, he hadn't participated in the arguments, letting the two sides argue back and forth.
Yu Xiang walked into the study and saw the man staring intently at the screen. She said, "Still looking?"
She was already aware of the overwhelming controversy online. This afternoon, her housekeeper told her that several media outlets wanted to interview her husband, but she had turned them all down.
Upon seeing Yu Xiang arrive, Huang Xiaochuan leaned back in his chair and said, "Watching the excitement is quite interesting; it shows that the people are becoming more enlightened."
Yu Xiang was a little confused about what the man was trying to do, and said reproachfully, "You..."
Then she added with some concern: "Some things are for the authorities to worry about. Why are you getting involved? You're just worrying about things that don't concern you."
Huang Xiaochuan smiled but didn't say anything. He knew Yu Xiang was concerned about him, but he had to speak his mind. Those views had to be refuted. If too many people held those views, it could lead the entire manufacturing industry down a path of no return. As a scholar, he had also experienced such things before, so he cared a lot.
The debate reached a new level the following day, mainly due to the involvement of a mainstream financial media outlet.
On that morning, Caijing Weekly published a special report entitled "Is the Low-Price Game a Vicious Cycle or a Way to Survive for the Manufacturing Industry?" The report opened with a two-page headline and a summary of related debates. The article devoted a considerable amount of space to presenting the main viewpoints of Huang Xiaochuan and the author who defended low prices, listing and comparing them one by one.
The report also interviewed several senior figures in the economics and business communities.
An economics professor from a top university said, "I think Professor Huang's analysis of the risk of deflation is correct, but the article does not emphasize the pain of transformation enough. We need to pay attention to the real gaps between different regions and enterprises of different sizes. If these contradictions are not handled properly, the stable and orderly development of society will be disrupted."
An expert in the field of information technology who has long studied China's manufacturing industry said: "The key to China's manufacturing industry getting out of the quagmire of low prices lies in using information technology to transform traditional production methods and shift from production-oriented to service-oriented manufacturing. This requires companies to make considerable investments and have a strong determination, and not all companies can accomplish it."
The financial weekly took a neutral stance in this report, which brought the debate to the attention of more ordinary people.
At the same time, the harsh reality of China's manufacturing industry has also been brought to the forefront. Previous reports from the Economic Information Daily have been brought up again. Data shows that a large number of manufacturing companies are still fighting for prices in a state of overcapacity, and are trapped in the predicament of operating with meager profits. The situation where the profit of two tons of steel may not be enough to buy a single LCD monitor is becoming a true reflection of the industry.
The data from the Boston Consulting Group report has also sparked a lot of discussion. Based on the cost of manufacturing in the United States, China's manufacturing costs are already very close to those in the United States. This means that the cost advantage of traditional low-end labor-intensive manufacturing has almost disappeared.
Huang Xiaochuan's article initially circulated and was discussed only within online academic circles. It then gradually spread to some forums and professional communities, and was subsequently disseminated more widely by netizens, resulting in an increasing number of people seeing the article.
This also includes major universities in China, such as Shanghai Normal University, where Huang Ruiying studied.