The weakness of China's manufacturing industry has been a focus of the world and China's various circles this year, and there are a large number of people who want to "revitalize" China's manufacturing industry. A large part of China's manufacturing industry has been relocated, and the fragility of private investment has also worried the leaders of the Central Government and State Council. Judging from the actual situation of China's economic growth, some provinces with industrial economic bases have higher economic growth levels than those with the only real estate.

So how is the development of the industries in China, especially the manufacturing industry?

In order to understand the truth of Chinese industries, especially the manufacturing industry, Anbound has been conducting fieldworks in different places in China, especially conducting surveys in Shandong, a major manufacturing province in China. We used a certain city in Shandong Province as a sample to do empirical analysis and then combined with other data in our research, forming a rough assessment conclusion, which states that China's manufacturing industry is divided into three parts. About one-third of the companies have successfully transformed, upgraded, and are on a new level; in the future, these companies will be further expanded. One-third of manufacturing companies have closed down or became zombie companies; such companies are impossible to be salvaged. Another one-third of the companies are in a difficult situation and such companies are in the process of differentiation; they are basically at the critical juncture of breakthrough or failure. This shows that one can be sure China's manufacturing industry is still in a difficult position as a whole, yet at the same time, it also shows the opinion that “China's manufacturing industry is completely finished” is simply unsupported, this opinion obviously neglects that one-third of the China's manufacturing industry is still strong. After a period of time, this part of the manufacturing industry is likely to grow and evolve into many new-generation Chinese industrial giants.

Anbound’ chief researcher Chan Kung pointed out that, in general China's manufacturing industry is in a process of major transformation, and there are many pressure factors to promote transformation; the most common is, of course the cost factor where China's urbanization has greatly increased the cost in a very short period of time, which has put a lot of pressure on the Chinese manufacturing industry. While this is true, there are still many other factors that worth noting, for example, the return on capital. The return on capital of the manufacturing industry is not attractive, especially when compares with the investment such as real estate, which has led to a lot of capital exiting the manufacturing industry and turning to other industries, especially in the other highly speculative industries; such situation is rather obvious in the recent time. Another key factor is the technical issue; due to the aging of many manufacturing industries, they are unable to adapt to market competition, and this will also lead to the closure of enterprises. In addition, there are entrepreneur related factors as well, such as the age, mentality, and succession of entrepreneurs, which all play a role and influence the development of the manufacturing industry. Therefore, it is inevitable that China's manufacturing industry will undergo a major transformation, but this is by no means the demise of the industry.

Chan Kung concluded that China's manufacturing industry had been benefited from the development of China's urbanization in the past 10 years; its success and failure depends on urbanization.

Anbound’s research shows that most of the Chinese manufacturing industries benefit from the development of energy and automobiles, which are typical urbanization-driven industries. Other than state-owned large energy companies such as oil refineries, many chemical industries are also closely related to energy like natural gas which is an important chemical raw material. The chemical industry has various categories and its development has a close relationship with energy. Looking at the automobile manufacturing industry, the spare parts industry is now performing very well; this seems to be inconsistent with the development of the current automakers. The reason is that although the automobile industry in China was a result of the development of urbanization, the spare part industry has transformed quite fast and many manufacturers have begun to enter the international market with 30% to 90% of products are sold to companies all over the world; returns of the international market are much higher than the domestic one.

Many entrepreneurs in China are working hard, but many of them failed to judge the situation correctly, sometimes this even leads to considerable failure; a huge number of entrepreneurs are confused about the big picture. There is a lack of market acumen, while some fail to keep up with the development and changes of the situation, which is the root cause that only 30% of the manufacturing operations can be successful.

Final Analysis Conclusion:

While China is struggling to promote economic transformation, its manufacturing industry is divided into three parts. The future government and policies must stabilize the one-third of the manufacturing industry that has been transformed and upgraded, and promote another two parts that are struggling to survive.