After more than 40 years of development, Wenzhou’s electrical industry has grown rapidly, had a sound industrial chain, and a high level of agglomeration. It has become a pillar industry of the city’s industrial economy and the first industrial cluster in the Wentai region to exceed 100 billion yuan. On November 15, 2020, 15 member countries officially signed the Regional Comprehensive Economic Partnership (RCEP), marking the formal conclusion of the world’s largest free trade agreement. The signing of RCEP will effectively promote the balanced development of China’s foreign trade import and export. On the one hand, it is conducive to promoting the diversification of China’s imports and expanding the import of advanced technology, equipment, and components; On the other hand, it is also beneficial for China to stabilize its exports to countries in the region. At the same time, the formal implementation of the agreement will face a more intense market competition environment for domestic industries. In order to deeply analyze the impact of RCEP implementation on industrial development and foreign trade, and assist Wenzhou’s electrical industry in forming new industrial development advantages at a higher level, the Municipal Bureau of Commerce, in conjunction with the Electrical Products Foreign Trade Warning Point, conducted a special survey on 65 sample enterprises, sorted out and proposed the basic situation of the industry, development trend prediction, and future countermeasures and suggestions.
1、 Basic Situation of Wenzhou Electric Industry
The electrical industry is one of the manufacturing industries with the largest scale and the largest number of enterprises in our city at present, and is also the largest electrical industry base in China. Its core product, low-voltage electrical appliances, has accounted for more than 60% of the national market share for many years. There are more than 11900 production enterprises (households) in the electrical industry in the city, including more than 830 above designated enterprises; 3 of China’s top 500 companies and 7 listed companies; There are over 300000 employees and approximately 250000 electrical marketing personnel working outside.
In 2020, in the National Advanced Manufacturing Industry Cluster Competition organized by the Ministry of Industry and Information Technology, the Leqing electrical industry in Wenzhou was awarded the title of “National Advanced Manufacturing Industry Cluster” and was shortlisted in the Top 25 National Advanced Manufacturing Industry Clusters. It is also the only industry cluster in China led by counties.
In the industry, there are 43 Chinese well-known trademarks, 13 Chinese famous brand products, 1795 low-voltage electrical appliance manufacturers with 3C certificates, 33876 valid 3C certificates and 215 industrial product production licenses. Led and participated in the formulation of 226 national and industry standards, 1 international standard, 4 Zhejiang manufacturing standards, and 2 certifications.
2、 Trade situation of Wenzhou’s electrical industry in the RCEP region
According to statistics, in 2020, the total sales volume of the electrical industry in the city was approximately 163 billion yuan, a year-on-year increase of 7%.8%; The added value of industries above designated size is 21.5 billion yuan, a year-on-year increase of 8%.3%. Annual Electrical Export Delivery Value 169.3.3 billion yuan, a year-on-year increase of 10%.1%. The export regions are ASEAN, the Middle East, the European Union, Latin America, Africa, Russia, and the United States in order of export volume. The total export volume of each region and its proportion to the total electrical export are ASEAN 27.800 million yuan, accounting for 16%.4%; Middle East 25.100 million yuan, accounting for 14%.8%; EU 21.900 million yuan, accounting for 12%.9%; Latin America 20.600 million yuan, accounting for 12%.2%; Africa 17.200 million yuan, accounting for 10%.2%; Russia 12.900 million yuan, accounting for 7%.6%; United States 12.400 million yuan, accounting for 7%.3%.
At present, RCEP is the largest free trade zone in the world, with broad development prospects and huge potential. Compared with the full year data of 2019, exports in the ASEAN market increased by 4% year-on-year.57%, with a significant increase in trade share. The top three countries in terms of export value are Indonesia, with an export value of 6.9.9 billion yuan, a year-on-year decrease of 8%.83%; Thailand 6.3.7 billion yuan, a year-on-year increase of 16%.84%; Vietnam 4.900 million yuan, a year-on-year increase of 19%.61%. In addition, the Korean market 4.8.9 billion yuan, a year-on-year increase of 19%.17%; Australian Market 3.8.4 billion yuan, a year-on-year increase of 13%.14%; New Zealand 2.5.8 billion yuan, a year-on-year increase of 29%.18%; Japan 0.5.3 billion yuan, a year-on-year decrease of 4%.71%.
3、 Prediction of the Development Trend of Wenzhou Electric Industry after the Implementation of RCEP
As the world’s largest free trade agreement, RCEP includes 10 ASEAN countries, China, Japan, South Korea, Australia, and New Zealand, covering 29 countries worldwide.7% of the population, 28.9% GDP means that about one-third of the global economy forms an integrated market, which will bring huge opportunities and challenges to the entire industry after its official implementation.
(1) Promote the development of export trade. After the implementation of RCEP, it will promote the realization of zero tariffs on one-third of China’s trade and drive the corresponding opening up of services and investment; Simplify customs clearance procedures and improve the business environment; The policy support within the framework is gradually improving, and the implementation of visa exemption and landing visa makes it more convenient and efficient for enterprises to conduct business negotiations abroad. All of the above have further reduced manufacturing costs and expanded corporate profit margins; The policy of zero tariffs and reducing non-tariff trade barriers has opened up a broader export market for electrical enterprises. At present, the export value of electrical products in Wenzhou only accounts for about 10% of the output value. I believe that with the help of RCEP, the export value of the electrical industry will have a significant improvement.
(2) Promote industrial transformation and upgrading. As a more comprehensive regional cooperation, RCEP will intensify competition in low-end industries, require higher quality, and have a more flexible industrial chain layout. This will be conducive to the survival of the fittest in the electrical industry and achieve industrial upgrading. At the same time, some electrical enterprises with poor core competitiveness and no independent research and development capabilities will face enormous survival challenges.
(3) Promote international technical cooperation. The integrated market formed by RCEP is more conducive to technical cooperation between electrical industry enterprises and advanced industrialized countries and enterprises such as Japan and South Korea, expanding the import of advanced technology, equipment, and components, helping electrical enterprises improve their core competitiveness and achieve high-quality development.
(4) Promote the construction of a compliance system. The implementation of RCEP will not only bring opportunities to the industry, but also bring new changes to existing customs supervision and potential new requirements for enterprise import and export compliance management. To enjoy the faster customs clearance efficiency brought by RCEP in the future, enterprises need to have a more comprehensive and accurate grasp of relevant information about their own import and export goods, improve customs management level, upgrade existing import and export compliance management system, ensure the joint improvement of declaration accuracy and efficiency, match with the future regulatory upgrade of customs, better enjoy policy dividends and participate in the competition in the Asia Pacific market.
4、 How to Seize RCEP Dividends in Wenzhou’s Electrical Industry
In more than 40 years of development, the city’s electrical industry has gradually accelerated its upgrading from the simple low-voltage field to complete sets of equipment, intelligent electrical and other fields. The product structure has expanded from a single production of low-voltage electrical components to more than 200 series, more than 6000 types and more than 25000 models of products covering power transmission, transformation, distribution and smart grid user end equipment, industrial control appliances, sensors and various special purpose electrical equipment, Formed a relatively large and complete industrial chain and nearly 20 professional small industries, the scale and quality efficiency of the industry continue to expand and improve, and the industry develops.Entering a period of stable growth. At present, there are still many unstable and uncertain factors in China’s foreign trade. Countries have taken a number of trade protection measures. Protectionism and Unilateralism have risen. The layout of the supply chain of the industrial chain tends to be regionalized, localized, and short chain. The sustained and stable recovery of global economy and trade is facing challenges. In this new situation, how can our city’s electrical industry seize the dividends of the RCEP market and create new advantages for development? Suggestions are as follows:
(1) Guide enterprises to establish awareness of competition and compliance. The services, goods, investment, and markets of 15 countries are further opening up, and competition is becoming increasingly fierce. We need to strengthen policy lectures, organize special lectures, guide enterprises to make sufficient psychological preparations, establish stronger competitive awareness, better business concepts, quickly learn and master the market rules of RCEP, benchmark advanced industrial levels, quality standards, and technical standards, and develop and grow in competition. At the same time, with the gradual promotion of RCEP, the management of customs clearance matters in the import and export process is becoming increasingly professional, refined, and standardized, which puts forward high requirements for enterprises’ “soft power” such as fast and efficient customs clearance. To ensure that enterprises can enjoy faster customs clearance efficiency, guidance and training on import and export compliance, rules of origin, and other related customs clearance technical issues should be further strengthened in accordance with the requirements of RCEP, in order to improve the theoretical and practical level of the enterprise’s compliance team.
(2) Boost the industry to step onto the RCEP international stage. The government should take the lead in supporting the establishment of online and offline trading platforms, and take the initiative to set up online and offline exhibitions in cities, counties (cities, districts). The online and offline exhibitions should be more inclined to the market of the agreement countries, give play to the Home advantage, and attract foreign merchants; We will also work together to strengthen cooperation with internationally renowned exhibition companies, select exhibitions from agreement countries to be included in the key exhibition directory, and plan to hold a self organized exhibition in Wenzhou City in agreement countries, guiding enterprises to accurately and quickly position themselves in the international market. We will carry out quality system certifications such as ISO, Japanese JIS, Korean KC, and KS, and support enterprises to collaborate with universities and high-level research platforms in agreement countries such as Japan and South Korea to build research and innovation platforms. Deepen economic and trade exchanges with sister cities and non-governmental organizations in the agreement countries, regularly carry out exchanges on product demand information, product quality, inspection and testing, certification mechanisms, and other aspects, and broaden the internationalization path of enterprises..Strategically attach great importance to guiding enterprises to actively layout the domestic market and stabilize the structure of the domestic trade market; Establish a procurement emergency service mechanism to provide consulting services for the substitution and supporting of upstream and downstream industries of enterprises. The second is to increase the construction and investment of sustainable development supply chains, fully utilize the import incentive clauses in the agreement, and expand the import of advanced technology and equipment from the agreement countries; Integrate domestic industry chain resources under the agreement, and carry out cross-border industry chain extension and expansion; Focus on the core weaknesses that constrain high-quality development, improve the R&D and innovation capabilities of key core components, and break away from external dependence on key technologies. The third is to introduce targeted financial support policies, improve the mechanism for cultivating export brands, guide enterprises to carry out international trademark registration and export brand certification, acquire high-quality brands from agreement countries through acquisitions, mergers, and cooperation, enhance international market competitiveness, and enhance the risk resistance ability of the industrial chain.
(Supplied by Wenzhou Municipal Bureau of Commerce)