Transforming the Industries of Dongguan

Dongguan being the factory of the world has been making a lot of products in the city and shipped around the world. According to statistics, one out of every three toys manufactured around the world and one in every five sweaters is made in Dongguan.

With a hugely productive young workforce and US$700 billion of foreign investment, Dongguan’s factories have been a huge force behind the ‘made in China’ phenomenon. Textiles, furniture and IT products, the city has been making a wide range of products. However, as time goes by the traditional labor-intensive low output value industries are no longer sustainable. Workers are demanding more than just a fixed job and a steady wage, they are looking for more holidays, greater pay and better working conditions, which has pushed production costs up, while competition from South East Asian countries with cheaper labor costs has driven many factories abroad.

It is not only Dongguan, but also all other cities across the China, have to face the severe economic and development issue. China continues its economic transformation. Dongguan has to transform its industries too. It will be more and more difficult for those companies with low-efficiency to survive and grow in the future. If you want to win in the future market, you are forced to introduce advanced technologies and upgrade equipment, in order to increase productivity and win competition.

“Products like toys and clothing will always have a market, but the question is how to upgrade our industries.”

The Songshan Lake High-Tech Industrial Development Zone is an example of this transformation. It is a huge development of multiple industrial parks, concentrating on financial services, cultural development and e-commerce, industries with higher added value and greater sustainability for development.

One project in the zone is a cloud computing center, supported by the Chinese Academy of Sciences. “We have built an open [IT] platform. Although the development of the IT industry is difficult to predict, we hope that the Songshan industrial zone can produce a company like Baidu, Taobao or [the instant messenging service] Webchat in the future.” Ji Tongkai, from the centre said.

Transforming the Industries of Dongguan

Crystal Group, in another part of the city, is also in the midst of a transformation. The company was founded in 1970 as a simple sweater factory employing just 70 people. Today, it employs more than 11,000 people in Dongguan, but the products they are making are very different from before.

“We have concentrated on increasing the value of our products, and focussing less on volume,” said Antony Lam, the company’s financial director. “Before 2008, we used to produce mainly plain T-shirts and sweaters, but in the last four years we have introduced more value-added processes and complex designs, this has helped us to remain profitable and competitive.”

The company has production of its basic products overseas, to countries including Vietnam, Bangladesh and Cambodia, while its Dongguan facilities are working on high-end products and design.

“We are no longer just a processing industry. We have partnered with our clients to advise them about design. We have a dedicated design team.”

The economy of Dongguan is still developing rapidly, and signs of new wealth are visible throughout the city, however whether it can make a success of developing from a manufacturer of low end goods to a scientific and high-tech leader is not yet clear. The transformation will have to continue, if the city is to continue to grow. The factory of the world may transfer to other inland cities in mainland China or even transfer out to other countries or areas. However the transforming and upgrade of Dongguan industry is unavoidable. We may not known as Made in Dongguan in the future, but we may be popular with Designed in Dongguan.