Why Should Companies Leave China?

1546 Words Dec 11th, 2015 7 Pages
1 Introduction
For many years, China has been known as the option for manufacturing abroad. There has been little thought about even considering any other country for manufacturing. However, times have changed. The entire economic battleground has shifted over the past few decades. As the years continue to go by, China begins to look less and less appealing. From rising costs to new competing markets, it looks like China’s near complete dominance in the marketplace is coming to an end. The question now becomes, why should companies leave China? If these companies do indeed choose to leave, the next questions will become, where will these companies go?
Part I- Why Are Companies Leaving
2 Rising Costs Every company is about profits. One of the most looked at parts of any company’s supply chain is its ability to create sufficient savings. One of the most prominent aspects is labor costs. Many companies in more developed nations will often outsource their manufacturing. This is more or less likely due to the abundance of cheap labor abroad. For the longest period of time, China has had the luxury of being a haven for cheap labor. However, as time passes on, Chinese labor costs have significantly increased. China has been seeing an estimated steady 11% percent increase in wages. JPMorgan Chase & Co. and Mizuho Securities Asia Ltd. Analysts predict that China will continue to increase by that percentage. The general consensus based on statistics seem to say that Chinese wages…
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