U.S. electronics maker Knowles adapts to a changed China

Knowles Electronics, a global company that manufactures the small microphones and receivers used in many Samsung, Apple and Blackberry products, is trying to restructure their global manufacturing strategy in order to keep its operations in China. The Chinese government hopes to increase their annual production growth in high-end goods to ensure that only the smartest, most successful companies, such as Knowles Electronics, survive. Raymond Tsang, a Bain & Company partner in Shanghai commented that if China wants to upgrade and continue to compete “on quality and product design, China needs to catch up with Germany, the U.S., and Japan. At the same time, on the cost side, China needs to make sure it won’t be overtaken by an India or Indonesia, he commented. Rising prices of land, raw materials and labor have caused many low-tech, low-margin producers to move to these lower cost countries.