Time was, when everyone was talking a manufacturing exodus from China. I felt like the lone voice saying “not so fast!” I cited a number of strategies which offset rising labor and other manufacturing costs mainly by adding value, as opposed to chasing cheaper labor.
Now it seems that media reports are falling all over themselves to agree with my position, that adding value and reducing waste makes more sense that pulling up stakes and moving out. This article, S’pore manufacturers to stay in China despite facing higher costs quotes HSBC as follows:
While rising costs has become a concern, many firms said that it is unlikely that they will uproot from China.
HSBC economist Donna Kwok said: “There is no other country in Asia at present that offers a better or bigger infrastructure network than China. We’re still seeing only a gradual experimentation by lower-value added producers in relocating some, but not yet all, of their presences overseas.”
Economists said it will take at least five more years before more lower-valued manufacturing activity move out of China to countries like Vietnam and Indonesia.