For the past few decades, American and Canadian consumers alike have been enjoying the benefits of having low-cost goods available to them through the inexpensive Chinese manufacturing industries. The change came somewhat suddenly to local manufacturers, causing huge job losses and even the complete collapse of numerous industries upon which the North American economies depended. This shift brought disappointment to many on one hand, but a great deal of satisfaction to consumers on the other hand, who had the pleasure of purchasing power, as the price of goods virtually froze.
Outsourcing manufacturing to China is still a popular choice among most manufacturers who have the opportunity to have their goods assembled, or completely built overseas, at incredibly low costs. Their savings brought the North American brands record profits, leading to keeping the point of sale costs attractive to the consumer. Chinese manufacturing of American products continues to provide consumers benefits, as well as to the companies that opt to outsource the work, as the Chinese employee wages are incomparable to those of Americans.
There remain many good years in outsourcing manufacturing to China, as statistics demonstrate. Although wages are increasing in China, primarily on the coast, and other costs are also on the rise, it costs 30% lower to manufacture the same goods overseas in comparison to them being manufactured in the United States. Still, even with the increasing wages in China, especially in the larger cities on the coast, like Shanghai, manufacturers who are feeling the pinch are looking to move their plants to lower-wage areas, like western or inner China. Such a move can see company profits further increase.
Chinese manufacturing of American products plays a huge role in the healthy economy here at home, where American consumers feel they directly benefit from cheaper prices, so they can have more–for less. China is directly responsible for curbing inflation in the countries with which it trades. Chinese plants provide Americans with toys, Christmas lights, and ornaments at affordable prices, with peak shipping ending in November, in an effort to ship goods ahead of the Christmastime rush.
With China as the current world’s largest manufacturing power, it leads in the output of TVs, Smartphones, among other electronic devices and virtually anything else you can think of, accounting for one fifth of the global manufacturing. Shanghai will remain the manufacturing center of quality electronic devices, even though inner China offers lower-waged employees, because these coastal plants have the skilled labor, as well as the top-notch engineers required to produce high-quality products.
Other countries simply cannot compete with the reliability of Chinese plants, especially with regards to their supply chain, in addition to their highly trained and reliable employees. China also has the advantage of a booming domestic economy where consumers are hungry for stuff of all kinds, meaning a whole new market for American companies. Some are even offering design work in addition to assembling goods, with top-flight managers and American consultants, proving their professionalism and a bright future. With waves of new graduates that study in the U.S. and return home, it’s safe to assume that many more such innovative companies will spring up.
To learn more about outsourcing manufacturing to China, contact ITI today. We’re here to help you!