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High Value in Harness Exports
The highest value category in Chinese cable exports is wiring sets, HS 8544.30, with an average value of $8,700/t in 2004. The cable element is a relatively modest proportion of the value of the finished harness, as the total value includes other harness components and assembly costs. The value of Chinese exports of harnesses more than trebled between 1999 and 2004. Exports of wiring sets in code HS 8544.30 went up from $218m to $667m.
Chinese Harness Production Grows Very Rapidly
Chinese production of harnesses has grown very rapidly in recent years. The main market sectors covered by this production are autos and electrical/ electronic OEMs. As well as an increase of production of harnesses to supply growing demand within China, there has also been an expansion of production for export. Chinese harness producers are competing with those in other low cost Asian countries (e.g. the Philippines and Vietnam) to supply harnesses to manufacturers based in Japan, Korea and Taiwan.
Growth in Lower Value Harness Exports
The average value for Chinese exports of wiring sets (code HS 8544.30) has declined substantially from $12,800/t in 1999 to $8,700/t in 2004.
This reduction in average value reflects a shift of Chinese production, as output volume has grown, to highly competitive market sectors such as auto harnesses.
Also Growth in Harness Imports
In view of the rapidly increasing strength of China as a production base for cable assemblies and harnesses, it is at first sight surprising that not only have exports of wiring sets grown, but there has also been strong growth in imports of these products. In absolute terms, the value of Chinese wiring set imports ($55m in 2004) is much lower than the value of exports ($505m).
High Average Value in Harness Imports
The average value for Chinese imports of wiring sets ($20,500/t in 2004) is now much higher than for exports ($8,700/t). In 1999 the position was the reverse of this, with the average value of wiring set exports being higher than that of imports.
Thus, while China has over recent years developed exports of low cost harnesses, the statistics show that more complex, higher cost harnesses are being imported. Another element of wiring set imports is part-finished harness elements (e.g. cable cut-to-length and terminated) that are shipped from South Korea to operations in China for the final, labour intensive assembly operation.
N E Asia is Main Destination for Export of Harnesses
By far the largest destination region for Chinese exports of harnesses is North East Asia ($522m in code HS 8544.30 in 2004). The main elements of this total are China’s near neighbours Japan ($349m) and South Korea ($147m). The only other major region for Chinese harness exports is North America ($108m). Other regions, including Western Europe with $31m, are much less important. Consumers of harnesses based in Western Europe generally use low cost producers of harnesses based in Central & Eastern Europe, much closer than China.
Strong Growth in Assembly Exports
Many of the exports in HS 8544.51, the product category with the highest total value ($1.54m in 2004), are products such as mains power leads. Growth of Chinese exports of these products has been particularly high, as companies have taken advantage of low labour costs in China by switching sourcing of cable assemblies to Chinese producers. As expected, the average value in the product categories that cover cable assemblies is higher than that of the equivalent cable without connectors, e.g. $3,000/t for HS 8544.51, compared to $2,400/t for HS 8544.59.
Assembly Imports Have Also Increased
Imports of assemblies (codes HS 8544.41 & 8544.51) have also been growing. In volume terms, imports of assemblies rated below 80 V (HS 8544.41) are less than 20% of exports of these products, but these imports are much more significant in value terms, as the average value ($19,200/t) is much higher than that of exports ($4,800/t). As we noted for harnesses, the statistics demonstrate that it is mainly more complex, higher added value assemblies that are imported.
Much Higher Average Value in Imports of Harnesses Than in Exports
In category HS 8544.51 (assemblies rated above 80 V), there is a similar trend, with imports of $0.5bn, compared to exports of $1.5bn, and a much higher average value in imports ($11,100/t compared to $3,000/t). This average value of imports has increased substantially since 1999, but the average value of exports has increased much more slowly. As $292m of the $511m total for HS 8544.51 imports into China in 2004 are recorded as being from China itself, there is a problem in interpreting the trade data: imports received from zones in China with free trade status are the likely explanation.
Many Destinations for Cable Assembly Exports
The spread of destinations for Chinese exports of cable assemblies is quite wide. Although North East Asia is the most important region for exports of assemblies, this region is not as dominant as it is for Chinese exports of harnesses. For product code HS 8544.51 (cable assemblies rated 80 V to 1 kV) North East Asia received exports of $455m in 2004, but North America was not far behind with $392m. Western Europe took $277m and Greater China, i.e. Hong Kong, took $265m. Exports to South East Asia were also large, $78m. North East Asia is also the largest regional destination for cable assemblies covered by code HS 8544.41 (below 80 V), receiving $198m in 2004, more than twice as much as Western Europe ($91m) or North America ($89m). $67m were supplied to Greater China.
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