Open Fab Community 2: China’s Shanzhai

As we look out over a new landscape of open fab tools, materials, and processes, we see changes taking place in global manufacturing that will accelerate and complement open fabrication. Chinese industrialization is perhaps the most important—particularly the sector of Chinese industry known as shanzhai manufacturing.

China is transforming the world economy, upsetting the economic balance of power to a greater extent than any other “developing country” since the United States emerged as a global superpower. This shift has been under way for the past several decades, but it is only in the last ten years that most global businesses have started to see the real effects of these changes. We’ll be seeing a lot more in the decade to come. By 2021, according to global economic forecaster IHS, China’s Shanghai-Jiangsu region alone will be a bigger economic player than the Netherlands, Australia, Brazil, Mexico, Korea, or Canada.

Manufacturing has been at the heart of this growth. After a more than century-long run as the top manufacturer for the world, the United States now stands at number two. China produced 19.8% of the world’s manufacturing output as compared to 19.4% for the United States in 2010. Much of this happened in the last ten years. In 2000, 6.9% of the world’s total manufacturing came from China; that nearly tripled by 2010. Analysts expect China to maintain this position for some time to come, but probably not at such a fast rate of growth. Over the next decade there will be two main drivers of growth in Chinese manufacturing: (1) Chinese companies will continue to make goods for the rest of the world, and (2) the world’s businesses will locate more factories in China to service the growing Chinese consumer market.

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