Chapter 4: Advantages And Disadvantages Of Manufacturing In China

U.S. businesses can benefit by outsourcing manufacturing efforts. One major advantage is significantly lowering labor costs. This includes cost of salaries, wages, and employee benefits such as health insurance and retirement packages. (Ashe-Edmunds, 2016) “The average hourly wage for Chinese manufacturing workers is less than a tenth of their average U.S. counterparts, according to the Bureau of Labor Statistics” (Borren, 2014). These savings are astronomical for businesses and can be spent elsewhere. Other advantages include fewer regulations such as labor conditions and waste disposal,

Just like other manufacturing, the company I worked had moved to China following the flow of manufacturing business. After researching the trend of future jobs in

As a result, their businesses may have a difficult time competing with those particular products made in China. If they match China’s prices, the domestic businesses may have minimal profit at best. Consumers would benefit from the import surplus due to having more choices in the market and allowing for a lower overhead by buying cheaper electrical machinery products.

When you go shopping to Walmart or Apple ask yourself where your product is coming from. China has numerous sweatshop factories assembling USA's products from stores as Apple and Walmart. China’s Sweatshop tends to violate human labor’s rights by forcing overtime and going under the mandatory minimum wage and other violations as long hour without pay, sexual, and physical harassment. China's sweatshop factory tends to be quite popular because is cheap labor, free trade zone, or low fee rates in taxes. The reason store as Apple and Walmart has their product to be assembled in China's factory is to avoid high export fees. Since Walmart and Apple factory's locations was identified and it came public in the media it shocked the world of its employee’s cruel working's condition. Factors in China are located in Guangdong Province Songang or in Shenzhen. For example Foxconn is a factory located in Shenzhen where Apple send their electronic to be assembled and made. In China the majority workers in factories is occupy by women and children. The percentage of women in China's Sweatshops is ninety percents. In China, the majority working in sweatshop are women which are young and not educated; in addition, forcing them to be ignorant of their own legal rights. Young women in China are attached to numeral discrimination and unfair pay. China's sweatshop is popular on violating labor rights, especially against women and underage minor women and men. It is unfortunate

Riordan Manufacturing began business as Riordan Plastics in San Jose, CA in 1991 as a research

As we explore the location of our new factory we need to take into consideration all of the social aspects such as transportation, standard of living, natural resources, immigration, unemployment, education, and religion. For example our main form of transportation method would be seaports. We would ship in all of the raw materials needed and we would also export all of our finish product to our consumers. The main seaports that are

You must evaluate some key factors in this decision like: quality, logistics costs, cost of international management, communication, supply chain resources, and taxes, tariffs, and fees. I believe that we have a mature product that is well documented and well managed and it is my idea that this company is capable in it’s ability to deal with and manage any risks with this move. There are many other reasons why production in another country can be beneficial. Not only does it reduce the shipping and logistics costs associated with getting our products to market, but it also increases the efficiency of your supply chain. Distributing manufacturing across the globe can make the supply chain more efficient due to it lightening the load for our current supply chain partners. By handing off the total workload along to international manufacturers, we can make our entire team more resourceful and complete a faster turnaround time. This faster turnaround time

According to Oxford Dictionary, Globalization refers to the process by which businesses or other organizations develop international influence or start operating on an international scale. China, with the implementation of economic reforms in 1978, has had a growing number of interactions with other countries in different capacities, ranging from economic and political to environmental and cultural. With the expansion of globalization, whether it has brought China more good than harm is widely debated. Deaton (2016) claims that globalization has done more good than bad. China certainly receives more advantages than disadvantages through globalization by increasing quality of life, economic growth, the advent of cultural diversity and the alleviating measures launched.

This paper is meant to determine whether or not the theory of comparative advantage applies to China with respect to the industrialized world. We will also touch on how the theory of factor endowment applies to China. There are some countries which operate in autarky, which will be discussed as well. Finally, we will examine how the distribution of gains from free trade causes much political debate regarding trade with China.

Location is a critical aspect of all operation management process. The driving forces of location are market economics, communication, supply chain efficiency, government restrictions, material flow, and labor (Heizer & Render, 2014, p332). By analyzing OM in the News articles China’s New Megacities and Industry Clustering, Where to Locate the Next McDonalds–in Your Hospital, Using Malaysia to Balance Supply Chain Disruptions, and Airbus Over Alabama it will make it possible to understand how important location is for an organization to gain a competitive advantage.

In today’s economy, China is one of the fastest growing countries. China has rich resources, which has become the leader of export around the world. China is developing rapidly, causes many eyes staring at this flourishing opportunity. For companies with a global outlook, having a foothold in China is a growing necessity. Foreign companies’ rapid expansion in China and the relative scarcity of highly trained local personnel mean many US and other foreign firms find it necessary to import key personnel for their China operations. In today’s global environment, companies often send their employees across the world in order to improve the organization 's performance and stay competitive.

In China the company has the advantage of the product itself being made according to the Chinese standards for quality, however, the big challenge is facing liabilities of foreignness and outsidership.

The third factor that could affect China’s ability to make items compared to the United States’ ability to make items is material costs. The example material I used is steel, because it is used in many industrial and household products. In the United States, it costs 681 USD for one metric ton of steel (Pearson, D.R.). This means that if you were a manufacturing or building company, you could buy one ton of steel for 681 USD. In China, it only costs 582 USD for a metric ton of steel (Yan, S). If you were a Chinese manufacturer or builder, you could buy one metric ton of steel for 582 USD. The steel in China is 99 USD (15%) cheaper than the steel in

Lastly, according to The China Post indicates, “China has robust domestic demand and wage arbitrage between China and Western markets is closing up, many multinationals are still keen to be a part of China’s growth story.” Which means, the cheaper labor is an arbitrage opportunity for us, and there have many companies trying to gain profit from running business in China. This will be another comparative advantage for us with our investment.

There are two types of strategies for foreign locations, a centralized location from which a facility can serve the world market and a decentralized location where facilities are set up in various regional or national locations close to major markets. A centralized location is chosen when there is a substantial difference among various countries in manufacturing costs due to each country’s costs, political economy, and culture. It’s preferred when trade barriers are low, exchange rates are expected to remain stable, the product’s value-to-weight ratio is high, and the product serves universal needs. If the production technology used by the firm has high fixed costs and high minimum efficient scale relative to global demand they can benefit from a centralized location. Centralizing is also favored when externalities arise from the concentration of like enterprises that favor certain locations. Conversely, decentralization is preferred when trade barriers are high, location externalities aren’t important, exchange rates are volatile, the product’s value-to-weight ratio is low, and the product does not serve universal needs. If production technology has low fixed costs, low minimum efficient scale and flexible manufacturing technology is not available, decentralizing is favored. Decentralization is also chosen if manufacturing costs in various countries are not substantially impacted by differences in factor costs, political economy, and culture.