High-end manufacturing on fast track

A-share listed, tech-focused firms see overseas footprints bear fruit

China's high-end manufacturing sector is on a fast development track with an increasing number of companies going public, gaining higher profits and expanding their footprints overseas, according to a report by the China Association for Public Companies on Monday.

High-end manufacturing, compared with traditional manufacturing that is labor-intensive, is more technology-focused and produces high value-added products, including semiconductors and electronics, the report said.

According to the report, the number of A-share-listed manufacturing companies reached 3,313 as of Dec 10, accounting for 65.5 percent of all A-share companies. Among them, the number of listed companies in the high-end manufacturing sector reached 2,121, accounting for 65 percent of listed manufacturing companies, up 69.7 percent from 1,250 at the end of 2017.

The market value of A-share-listed high-end manufacturing companies has increased significantly, according to the report. The number of A-share listed manufacturing companies with a market value above 10 billion yuan ($1.4 billion) increased from 338 at the end of 2017 to 664 on Dec 10.

"China's high-end manufacturing industry is developing rapidly, resulting from the country's relatively mature industrial chain and good domestic business environment to support innovation," said Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing.

"In addition, the COVID-19 pandemic has caused a breakdown of the global supply chain, while uncertainties in international trade and geopolitical conflicts also posed challenges to the manufacturing supply chain. Facing shrinking global market demand, an increasing number of companies are investing more in research and development to increase the added value of their products, to obtain higher profits and increase global competitiveness, which promotes the development of high-end manufacturing," Zhou said.

According to the CAPC report, companies in the high-end manufacturing sector have continuously improved their ability to make a profit. The profit level of A-share listed high-end manufacturing companies declined in 2018 due to trade frictions and other factors. However, with more efforts on the promotion of import substitution and overseas market expansion, the profit level began to increase rapidly since 2020, with a growth rate of 46 percent year-on-year in the year.

"There are more business opportunities to explore in the global high-end manufacturing sector. Companies should improve product quality to raise competitiveness and explore more cooperation globally," Zhou said.