Dongguan, the leading manufacturing hub in southern China, bore the brunt of plunging overseas demand following the 2008 global financial crisis, but it was also among the first to figure the way out of its old economic model — over-reliance on exports and excessive focus on low-end products.
The city’s gross domestic product growth hit a low of 1.2 percent in the first quarter of 2012. This year, the annual growth is expected to top 9 percent, according to a China Securities Journal report.
Making products under foreign labels, including the Original Design Manufacturer and Original Equipment Manufacturer route, were once the dominant way of doing business in Dongguan. Most of the city’s factories were reluctant to change until the heavy blow in 2008. Competition from cheaper manufacturing bases in inland China and Asian emerging economies like Vietnam brought further incentive to seek a new path in recent years.
Now, many companies there are accustomed to, or are ready for, transformation. Some are creating their own designs tailored to domestic market needs and opening cost-effective, exclusive sales channels through e-commerce platforms, as the Journal noted.
To differentiate their products, some firms are investing heavily to bring in overseas experts to boost research and development capability.
Financially stronger players are also resorting to acquisitions to obtain crucial technology. Intensive efforts have also been spent on brand building.
Dongguan’s success may inspire more enterprises to begin their corporate upgrade odyssey.
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