In 2020, major events that will change the course of history will follow one after another.

On November 15, the Regional Comprehensive Economic Partnership Agreement (RCEP) covering 1/3 of the world’s population was officially signed, and the world’s largest and most influential trade agreement was born.

Although it will take a few years to wait until RCEP is fully functional, for China's manufacturing industry, its zero-tariff free trade feature is likely to have an immediate effect.

Since the beginning of the great nautical era, trade has been changing the operating rules of the world. And this time RCEP may be one of the most important trade agreements recorded in human history.

Why is it zero tariff?

RCEP is a comprehensive agreement that covers all aspects of trade in goods, service trade, and investment, but the core content of the agreement is that the number of zero-tariff products in goods trade in the agreement countries accounted for more than 90%.

Since modern times, because regions have mastered different first-mover advantages and different innate resources, in order to protect local weak capital forces, various countries and regions have often enacted high tariffs to block the living space of overseas products. In the current globalization , This move is obviously a historical reversal.

Adam Smith stated in "The Wealth of Nations": "The division of labor is the main reason for increasing labor productivity." On the one hand, each country concentrates on developing its own strong industries, and on the other hand, it is easier to achieve "common prosperity" by purchasing cheap products through global trade.

In the 19th century, the opening of a new waterway, Britain, as an industrial power, broke through the trade barriers between different raw material countries and dumping sites through the violent means of strong boats and guns, bringing painful disasters to various countries. However, this approach has virtually promoted the development of the global economy. Statistics show that between 1860 and 1913, the global industrial production value increased 7 times due to the prosperity of trade.

After entering the era of peace, the WTO emerged. It can coordinate tariffs in various regions through agreements. However, under the influence of comprehensiveness and most-favored-nation treatment, the WTO is now somewhat incapable, and even tariffs are difficult to reduce. Don't mention zero tariffs. Take Brazil as an example. Because its industrial manufacturing capacity is not as good as China's, in order to protect its own industry, its average weighted tariff rate is as high as 9.65%, which is about twice that of China.

From this, let us look at the far-reaching significance of the RCEP agreement. The number of zero-tariff products in the trade of goods in the agreement countries accounted for more than 90%. The numbers are boring, but from this number we can see two extremely important directions:

1. Since there are not too many trade barriers in the agreement countries, this will enhance competition among similar companies and give birth to companies driven by technology as their vitality;

2. Under the impetus of the invisible hands of the market, multinational companies will gradually optimize and integrate a more rational value chain division of labor system and reorganize their supply chain portfolio plans.

Fortunately, these two aspects are the next focus of China's efforts-research institutions predict that under ideal conditions, RCEP will increase China's export growth rate by 11.44% and import growth rate by 17.12%.

New momentum for China's home appliance industry

The reason why China enjoys the RCEP dividend is that, in addition to occupying "half of the country" in terms of population, GDP, and foreign exchange reserves, the more important reason is that China is at a high position in the center of the global industrial chain. Among them, the home appliance industry is the most important. typical.

From the perspective of the supply chain, part of the reason for the decline of Japanese and Korean home appliance companies is because of the strong rise of China's supply chain. Take the panel as an example. As Chinese panel companies such as BOE and China Star Optoelectronics have made efforts to lower panel prices, LGD, Samsung, and JDI have been forced to announce the gradual abandonment of large-size LCD panels.

According to data from the Japan Electrical Manufacturers Association, the total export value of the Japanese home appliance industry from 1990 to 2016 fell from 2.77 trillion yen to 2.32 trillion yen, a 16% drop.

Statistics from the National Bureau of Statistics show that the added value of my country's manufacturing industry has increased from less than 100 million yuan in the 1990s to 26.5 trillion yuan in 2018, accounting for about 30% of GDP.

Comparing the two, it can be found that the rise of China's manufacturing industry has just taken over the sluggish Japanese home appliance industry.

Japanese home appliance companies were able to take the global market by storm at the end of the last century, mainly because they mastered cutting-edge technology. For example, in 1960, Toshiba developed Japan's first color television picture tube television. However, with the shift of supply chain bases, it is difficult for Japanese and Korean home appliance companies to popularize cutting-edge technologies. For example, in 2010, Canon disbanded SED Co., Ltd., completely declaring the SED industry that Japanese and Korean companies have been operating for nearly 30 years.

In this round of industrial migration, China's local home appliance companies have grasped cutting-edge technologies in time and quickly industrialized and popularized them.

Under the new framework of RCEP, China's home appliance industry will usher in another distinct benefit in the two dimensions of technology and supply chain:

1. As China's home appliance industry has absolute advantages at the supply chain level, through the expansion of production and sales capabilities, it is bound to attract global capital to participate in it, further improve product quality, reduce product prices, and promote the rapid implementation of cutting-edge technologies.

2. With the disappearance of tariff barriers, China's home appliance products can again tap emerging markets such as Southeast Asia with this cost and technical advantage.

EuroMonitor data shows that in 2019, the retail sales of home appliances in the Asia-Pacific region was US$204.8 billion, accounting for 46% of the global retail sales of home appliances.

According to data from the General Administration of Customs, in Q2, Q3 and October 2020, the export value of China's home appliance industry increased by 14.0%, 39.6% and 39.5% year-on-year respectively.

Calculating from the above two big data, after the RCEP is fully rolled out in the future, there is no reason that China's home appliance industry with first-mover advantage will not increase significantly.

Wang Zhiguo, chairman of Skyworth Group, said in an analysis of Electronics Technology that after the landing of RCEP, it will definitely be a good thing for China's color TV industry. First, it can further release production capacity because the sales channels are smoother. Second, it can be based in Southeast Asia and other markets to radiate the global market. .

Hisense told Electronics Technology, “Hisense has set up a special department this year to focus on the Southeast Asian market, and its growth momentum is very good. The implementation of RCEP is a timely rain for Hisense to expand the Southeast Asian market and provides very strong policy support.”

In fact, once the RCEP is launched and the relevant markets are completely liberalized, the two benefits surrounding China's home appliance industry can still carry out a two-way cycle. Strong growth in overseas markets can further support technological progress, and technology can in turn enhance the overall strength of China's manufacturing industry.

For the Chinese manufacturing industry, especially the home appliance industry, the biggest difficulty at present is the market sales. Once the channels are broadened, with the super-physical strength of Chinese home appliances, not only can we ignore the "touching porcelain" actions of certain forces, but also give full play to The internal driving force serves a broader market.

2020 is coming to an end. In this rolling historical trend, China's home appliance industry, which is sailing together on the national shipping ship, has ushered in an unprecedented opportunity for development.