Daily Management Review

Made In The US Could Soon Replace 'Made In China'


06/01/2017




Made In The US Could Soon Replace 'Made In China'
Rising costs in China have been forcing manufacturers to explore new countries to make their goods and therefore contrary to widespread belief, China isn't the cheap place to manufacture that it once was.
 
And even many Chinese manufacturers are taking a second look at the U.S. even though the country may not be top of mind for all industries. And more will likely come looking if the possibility of lower corporate taxes under President Donald Trump becomes a reality.
 
"The reason we want to invest in the U.S. isn't only because the Trump administration is encouraging it," Xiao Wunan, deputy chairman of Asia Pacific Exchange and Cooperation Foundation, who takes Chinese business executives to the U.S. on investment tours, told CNBC. "The U.S. has natural advantages for [Chinese] investment."
 
Finding prospective investment locations in the U.S. for Chinese companies is what John Ling, president of the Council of American States in China, does for a living.
 
"In every project I help to land in the U.S., if I cannot present evidence that they can lower their costs, my chance of doing [the deal] in the U.S. is almost zero," he told CNBC. "Cost is driving this."
 
The U.S. can come out on top when costs are taken as a whole even though American workers earn a lot of money compared to their counterparts in China.
 
According to the firm's president, Zhu Shanqing, American workers were paid on average twice as much as workers in China for Hangzhou-based textile manufacturer Keer Group. However, producing in the America is significantly less compared to China in aggregate.
 
"In the U.S., land, electricity and cotton are all much cheaper," Zhu said. "My production cost per ton of textiles is 25 percent lower [there]."
 
For much of the past decade, there has been a steady increase of 30 percent each year in wages for him in China, he said. He plans to eventually move the entire business to the U.S. and has pledged $220 million to build and expand a facility in South Carolina. And by the end of the year, he plans to employ more than 500 people by the end of the year in the U.S.
 
And the U.S. will become a no-brainer for many manufacturers in the possibility of a lower corporate tax to as little as 15 percent, as proposed by Trump.
 
"If Trump cuts the corporate tax even by 5 percent, companies that left America a few years ago, will be back," he said.
 
China has been a stalwart of stability for manufacturers for decades compared to many other countries, especially in the emerging world. However issues like better air, safer food, straightforward access to funding and a government that doesn't intervene are some of the selling points that the U.S. does have which Chinese companies don't really like to talk about on record.
 
Americans are the buyers of today while Chinese consumers are the spenders of the future. Many companies see the U.S. market as the holy grail as they grow in stature and expand their footprint overseas.
 
(Source:www.cnbc.com) 






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