China has so far achieved what analysts at Credit Suisse called in a research note published this week a "dramatic ascent of the value add curve" citing as an example that China has "more than doubled its share of the domestic robotics market." So while you might once have been shocked to see designer clothing with a "Made in China" label, you can now spot them everywhere from Diane von Furstenberg to Prada.
However, as they have climbed this curve, Chinese companies seem to have maintained similar margins – whereas in the West, margins typically expand as you move up the value chain. To put it bluntly, Chinese manufacturers seem to be able to produce goods relatively cheaply even when their goods are more expensive.
"As we see increasing value add from China, it becomes more difficult for Western companies to play the "quality" card," the Credit Suisse analysts wrote.