From Manufacturing to Services and Its Local Impact on the Economy

[peter0425]

Have you noticed this type of shift in your own country? If you live in a country that has transitioned to a service-based economy has it had any positive effect such as innovation, growth, income distribution, employment rates, more than the goods based economy or not?

I have always felt like my country contributed more in terms of services. We probably are one of the biggest service distributors not only within our country but in the whole world. As expected, when I searched for data it is indeed true that my country has long been a service based economy.

Even from the year 2000s until now, it gradually just increased. It is where the biggest percentage of our GDP comes from and it has always been a debate whether it will continue to be. The answer is yes. Though for a stronger economic future, both goods and services must be utilized.

[Kemarit]

I have seen countries transition from goods based economies to service based economies. Examples of these countries are China, United States, Germany and some others. These are countries that were once reliant on manufacturing and industrial production but now shifting towards services in education, healthcare, finance, and technology. Have you noticed this type of shift in your own country? If you live in a country that has transitioned to a service-based economy has it had any positive effect such as innovation, growth, income distribution, employment rates, more than the goods based economy or not?

The countries that you have mentioned though are 1st world, and perhaps it was easy for them to make transition, in my opinion. And there are countries who might be trying this formula but failing and still rely on the only thing that can bring money to them, exporting their products.

So there is not positive effects on the country that I lived in, but obviously, we have seen countries that have transitioned really become one of the biggest, but there could be some drawbacks as well, like their population getting old, and the new generation can't adapt on the new economy and that's why they really need immigrant workers for their service-based economy transition.

[kryptqnick]

When it comes to my country, we need to get into certain areas of manufacturing because it's essential for our survival as a country. I initially wrote that we're mainly agricultural, but apparently we are actually 60% service economy.
I do believe that transitioning more to services is still the right idea for most economies, but someone needs to do agriculture and manufacturing, so relying fully on services is very risky.
Even if we look at China that the op mentioned, it actually has a balance: it's nearly 55% services but also almost 40% industry.

[lixer]

China is still relying on goods based economies because they have a lot people, they adopt 996 working hour system which mean the employees need to work from 9 AM to 9 PM for 6 days. Even they've work for 72 hours, they didn't get paid well and if you think you can just search for other jobs. Well it's not that easy because if you didn't willing to work for 72 hours, there's always a person willing to do that.

So, the result is, they need to work long hour and get paid low.

Yes because they are already known to be the main supplier of different goods from different parts of the world but it won't be possible if not because of that strict system they have implemented. Other countries might be happy because of the service China did to them but I think they can also feel bad once they realize that there are poor individuals who are busting their assess all day - all night only to make this possible. And the worse thing is, they also didn't get paid well.

Jobs in China are in demand because of the fact we told earlier but majority of those are only the same as the other, so quitting and trying their luck on the other, might be useless. They can't also get accepted on a better job because of their poor background.

[jrrsparkles]

I have seen countries transition from goods based economies to service based economies. Examples of these countries are China, United States, Germany and some others. These are countries that were once reliant on manufacturing and industrial production but now shifting towards services in education, healthcare, finance, and technology. Have you noticed this type of shift in your own country? If you live in a country that has transitioned to a service-based economy has it had any positive effect such as innovation, growth, income distribution, employment rates, more than the goods based economy or not?

China isn't service based economy and I don't think they ever planned from giving up their manufacturing hub of the world status. Even though USA is highly service based economy due to technology based jobs still it's not completely relying on it and still atleast 5% of people doing agriculture on various crops and exporting as well like corns.

Countries should be focusing on less dependent on any country for their future which is self sustainable economy even though it's not 100% possible they should move towards it that will give the organic growth in the economy that can withstand last long than these quick shifts in the services and manufacturing goods.

[Davidvictorson]

China isn't service based economy and I don't think they ever planned from giving up their manufacturing hub of the world status.

Are you sure about this? Because from the Harvard Business Review article with the title, What China’s Shift to a Service Economy Means for Its Managers, the authors clearly states that China is moving away from a manufacturing-driven economy to a more consumption and service-driven model. Unless you can provide a counter opinion with evidence about this, I think I'd be sticking to my stance about China's economic model.

[Juse14]

If you really think that without manufacturing you could still do something, then you are quite wrong. And the "service" that these nations usually provide is not that easy, like UK providing banking to nearly all over the world isn't all that easy.

We need to remember that we are going to end up with something much bigger, plus China is not in the discussion with these, because they are literally production heaven and they are just switching from being a nation where others manufacture things, it became a nation that manufactures their own stuff and sell to the world. Every nation has something but you can't become a sustainable nation without manufacturing, it has to stay, small or big, it has to stay without a doubt.

Your assertion about manufacturing being a significant backbone of the economy is indeed correct and should not be overlooked. The services, such as banking, that developed countries offer are intricate, they are not achieved easily. Yet we must also acknowledge that every nation has its own unique competitive advantages.

China stands as a great exemplar in this light,  emerging from a foundation of robust manufacturing strength to now take its place among global front-runners in production and technology. Manufacturing thus forms the cornerstone of the economy, providing impetus for other sectors to blossom and grow alongside it.

Despite the vital role that services play, manufacturing still holds its significance in the realm of producing tangible goods and fostering employment opportunities. A nation cannot wholly rely on its service industry; manufacturing not only fosters stability but also acts as a frontier for technological innovation and production efficiency.

To sum it up, finding equilibrium between these two sectors would spell out sustainability for any economy. The thriving nations often have prowess rooted in both sectors, which then paves way for a dual strength holding point ensuring stability and sustenance for growth.

[jrrsparkles]

China isn't service based economy and I don't think they ever planned from giving up their manufacturing hub of the world status.

Are you sure about this? Because from the Harvard Business Review article with the title, What China’s Shift to a Service Economy Means for Its Managers, the authors clearly states that China is moving away from a manufacturing-driven economy to a more consumption and service-driven model. Unless you can provide a counter opinion with evidence about this, I think I'd be sticking to my stance about China's economic model.

The article proves nothing but the author considered very small scale part of China considering as whole China. I just want to counter that with what happened when China locked borders due to COVID, everything stumbled all around the world and if they do the same thing today the situation will be pretty much same.

Although China is not only known for manufacturing cheap products but they also capable of making quality products infact all the mobile we use still today manufactured in China still now and only assembled in other countries.

[pooya87]

China isn't service based economy and I don't think they ever planned from giving up their manufacturing hub of the world status.

Are you sure about this? Because from the Harvard Business Review article with the title, What China’s Shift to a Service Economy Means for Its Managers, the authors clearly states that China is moving away from a manufacturing-driven economy to a more consumption and service-driven model. Unless you can provide a counter opinion with evidence about this, I think I'd be sticking to my stance about China's economic model.

I'm not an economy expert so take my comment however you like but I feel like these "professors" are caught up in a certain flawed and in some cases obsolete ideology and are incapable of thinking outside the box. This is a general problem I've seen a lot around the world not just about these two who wrote this article.

I can see that their statements and even at the end their suggestions of what should be done is alongside that old ideology. For example they are too caught up into the Consumerism methods where you first create a product and then find demand for it. You can clearly see it in the "What should Chinese companies do" part at the end and in wrong statements such as this:

~ In the past, this belief was very much reflected in China’s customers’ preference for lower-quality but cheap products.
~ customers cannot be lured in with cheap, low-quality offerings.

What China has always done was not the same Consumerism approach as exists in the West which is to produce something, then lure people in to buy it (eg. release pretty much the same iPhone every year and still get people to buy it).

The Chinese approach is to first look what the people around the world want and second to look at the quality of the product they want and third look at how much they can pay for it.
So for example if someone in USA wants an electric toothbrush but can only afford to pay 10 bucks for it, they manufacture a low quality toothbrush worth $10 for that demand that already exists. They do NOT lure in people with "cheap low quality offerings", people are already looking for cheap goods because that's what they can afford.

That's not all China does. There is also other people who want a toothbrush and can afford to pay 50 bucks for it so China also produces higher quality toothbrushes worth $50 for that demand.

The reason why China is known for low quality products is first because of propaganda and second because believe or not there is more people in lower class with less money seeking cheap goods than there are people in higher classes looking for expensive goods. So China as the world's factory produces more goods for the category that is the majority so it looks like all their products are low quality where as it's just the majority because that's what the majority demands.

China is of course increasing its production capacity of high-tech goods that are also more expensive but that is not the same as transitioning to a "service-based economy".