Why Chinese Industry Still Can’t Set Global Prices

Chinese industry is often celebrated for its scale, speed, and global dominance in manufacturing. From smartphones and electric vehicles to solar panels and home appliances, China produces more than any other nation. Yet despite these massive outputs, one critical issue remains: Why can’t Chinese industry set the global price for its products?

This article explores the reasons behind this pricing paradox and what the Chinese industry must do to transition from being the world’s factory to a true industrial superpower with global pricing power.

The Middle-Income Trap and the Price Power Problem

First, for China to leap over the middle-income trap and become a developed country, at the very least, it must cultivate a group of world-class high-tech companies. Each of these companies should be able to sell its products globally, creating tens of thousands—or even hundreds of thousands—of high-paying jobs. Just look at the United States: Apple, Intel, Microsoft, AMD, Google, NVIDIA, Qualcomm, Broadcom, Texas Instruments, Boeing, Raytheon, and many other high-tech giants dominate global markets with their products. These companies earn huge profits, support large numbers of engineers, deliver high returns to capital, and help sustain long-term bull markets in U.S. stocks.

Second, beyond technological breakthroughs, top-level design and business models are equally essential. A case in point is China’s photovoltaic (solar energy) industry. After 20 years of development, it has evolved from merely assembling foreign components to mastering a vast array of core technologies, becoming the world leader in patents, production capacity, and complete industrial chains. Yet, at this stage, the entire industry is suffering losses. Although exports have increased tenfold in ten years, prices have barely changed. Even top companies like LONGi and Tongwei are losing money. Why? Because of extreme internal competition and relentless price wars. The result: despite technological advances and scale, the industry is trapped in another pitfall—growth without profitability.

The Real Power Lies in Branding and Control of Value

To understand this imbalance, let’s look at how other nations treat high-value industries.

The British Diamond Strategy

Contrast this with how the British handled the diamond industry. De Beers managed to sell diamonds for over a century. Before the 1970s, Japanese people didn’t buy diamonds; before the 1990s, Chinese people didn’t either. But the British used marketing to turn diamonds into a wedding necessity. All diamonds were sent to London for cutting, grading, and certification. Through this process, the British gained pricing power, and workers in this industry were paid high salaries. Switzerland’s approach to the watch industry is also a textbook example of a successful business model.

The result? Britain set the price of diamonds for over a century—and paid its workers high salaries to boot.

The Swiss Watch Model

Even a small country like Switzerland has world-renowned enterprises like Roche, Novartis, Nestlé, ABB, and SKF. These companies are the foundation of Switzerland’s status as a developed nation. China must break through the industrial barriers set by the West, Japan, and others, and foster a group of world-class enterprises in order to truly qualify as a developed country. Switzerland does not produce watches at the scale that China does. But Swiss watches are globally synonymous with luxury and quality. Swiss firms control the narrative, brand, and pricing, giving them unmatched value retention.

In contrast, Chinese industry often dominates production but not perception. The journey to becoming a developed nation is long and requires ongoing learning and accumulation. It means constantly contending with major powers while also engaging with them—what one might call “fighting without breaking.”

Why Can’t Chinese Industry Set the Price?

Let’s break down the core reasons:

• Lack of Global Branding: Most Chinese manufacturers are OEMs, not consumer brands. They produce for others, not under their own name.
• Overcapacity and Internal Competition: In many sectors, Chinese firms aggressively undercut each other, creating a race to the bottom.
• Weak Control Over Distribution Channels: Western companies control high-value segments like marketing, retail, and after-sales.
• Low Profit Margins as a Strategy: For years, the goal was expansion and market share, not value capture.
• Limited Influence on Global Standards: Without setting global standards, Chinese industry is often a follower, not a leader.

The Way Forward: From Production to Pricing Power

Invest in Global Chinese Brands

If Chinese companies want to command prices, they must invest in branding, customer experience, and value perception. Branding is not a luxury—it’s a necessity for pricing power.

Shift from OEM to OBM (Own Brand Manufacturing)

To own the value chain, China must go from making things for others to marketing and selling under its own global brands.

Strategic Cooperation Over Price Wars

Industries need policy guidance and cooperative frameworks to avoid self-destruction through price competition. Only then can Chinese industry build a stable, high-profit environment.

Conclusion: Chinese Industry Has the Power—Now It Needs the Strategy

Chinese industry has the capacity, scale, and technical skill to lead the world. What it lacks is control over value, brand, and perception. These are the key ingredients needed to set the price rather than follow it.

The path forward isn’t just about building more—it’s about building smarter. If China wants to escape the middle-income trap and become a developed nation, it must ensure that Chinese industry commands value, not just volume.

Only then will “Made in China” truly become synonymous with value, trust, and global pricing leadership.