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Overcapacity? China’s competitive edge lies elsewhere

Nothing has become so prevalent in the shifting sands of political and trade spats between the United States and China as the concept of Chinese industrial overcapacity.

I meet hundreds of these companies every year. There are so many glaring reasons they are able to outcompete many Western companies.


Why the EU, US are concerned about China’s overcapacity

The first advantage is the presence of natural and cutthroat competition within China across many industries. Name any product or industry in China with one successful company and there are many others doing everything they can to surpass it.

The result of this competitiveness is exceptionally hard work at blazing speed. Companies expect long hours and quick results from their teams. There’s always someone out there willing to work harder for less, so as an employee you might often have little choice but to grind away.

Compare this situation with the opposite happening in Europe where companies can barely get workers back into the office three days a week and many employees get offended if a work-related text comes in after hours. Which of these settings is going to produce cheaper products at a faster pace?

Take EV battery chargers for example. There are multiple well-funded Chinese companies making a very similar product. Some of them emerged within the last decade or so and I suspect only a couple will still be here 10 years from now.

These kinds of companies have already largely fended off most international competition by making slightly more affordable products with a few more bells and whistles each time. Now the competition between them will intensify and the victors will be those with better micro innovations at a faster pace.

Another vital reason Chinese