It is well known fact that the manufacturing costs a same product will vary the regional where it is coming from. It is mainly because cost of the product is function of several parameters like labor, raw material, electricity, transportation required to transfer raw material. These are basic reasons are which are causing regionalization.
In the case of bulky electronic equipment, the transportation cost of shipping the manufactured products may be very high. Companies may find it more profitable to ship raw materials to the other country and manufacture the final product there. I think this may be the reason why regionalization is increasing.
If rising cost of labor is posing a challenge in China, then the fear of Quality product may be another and this may pose a challenge to the shareholders. Global economic challenges stand to be another thing that will affect the production level hence determining the cost of goods made and sold.
Majority of us that want these manufacturing companies to come back home are in the consuming end. To the shareholders, as long as the returns are great, they will like it to stay off shore. Country's pride of having them at home is not paramont in the heart of the shareholders except they recieve certain level of acceptability that can make their investment yield as expected. We will continue to dream it and say it perhaps one day our dreams will come true. We absolutely need to minimize outsourcing and bring these jobs back to the country. Factors that may effect this change may be enormous but it is possible.
"Saying people won't buy products made in China because people want to keep their jobs is being closed minded and not looking at the big world picture."
Actually, business rules are not as simple like that. A company is first accountable to its shareholders, not to its country. But there is nothing wrong about people wish to see some of the oversea jobs come back home.
Saying people won't buy products made in China because people want to keep their jobs is being closed minded and not looking at the big world picture.
@jbond, I totally agree with your observation. Globalization is the reality everyone has to live with irrespective of whether they like it or not. One good thing about globalization is there is global competition between companies which makes them to innovate to stay in the competition. Thus because of globalization some countries might gain, some countries might loose but in the end customer wins.
The costs of Chinese labor, fuel, and transportation are all increasing faster than most expected.
@Jennifer, thanks for the post. I think inflation is bigger threat to not only china but to all the developing nations. For example in India also GDP growth has reduced drastically because of inflation. Weakening currency is one of the major reasons why inflation is so high in developing nations.
“Rising cost is a primary driver………….A second driver is increasing global risk”
Jennifer, yes the labour cost is increasing in China and this makes a second thought to most of the investors. Now a day’s most of the investments are happening to nearby Asian countries and Philippines. The second factor global rise is common for all the investments irrespective of location.
Jbond, Good information! Lets study the Table, Machinery to copy, the rest of the stuff is to keep there manufacturing going. Chevy is part of Toyota or Toyota is part of Chevy? We're driving Honda and Toyota because of reliability! Can 80% of people people driving foreign cars, Honda and Toyota all be wrong? When your on the FWY look to the right and left and the percentage of foreign cars!
How about CHINA IMPORTS of shoes, shiirts, cloths in general, sports equipment, books, after market replacement parts for cars, not to mention all the counterfieting thats going on in CHINA!
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.