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The End of the "Made In China" Era

THE END OF THE "MADE IN CHINA" ERA The phrase "Made in China" embodies cheap labor, the outsourcing of American manufacturing jobs, and China's transformation into one of the world's economic superpowers. However, it seems the end of the "Made in China" era may be in sight. Read on to discover what's fueling a move back to homegrown production. MANUFACTURING COSTS IN CHINA ARE INCREASING The cost of outsourcing manufacturing to China is expected to equal the cost of producing goods in the U.S. by the year 2015. "The Chinese manufacturing cost advantage has eroded dramatically in the last few years. If you go back to 2005, it was pretty common for landed cost from China to be 25 to 30 percent less than the cost of manufacturing in the United States. Based on our analysis, two-thirds of that gap has closed." 2005 2013 - Steve Maurer, Managing Director, AlixPartners MANUFACTURING COST FOR BOOK PUBLISHERS IN 2013 9x9 inch 9x9 inch 334-page hardcover book $0.44-45 to produce 334-page hardcover book $0.65-.68 to produce $0.03 for shipping 30 days to ship Reduced shipping costs and time If Chinese costs increase by half, as predicted, it'll be just as cheap to publish in the U.S., and shipping times will be reduced. Manufacturing in China is more expensive than manufacturing in: Mexico India Vietnam Russia Romania CHINESE WAGES ARE ON THE RISE MINIMUM WAGE INCREASES ACROSS CHINA IN 2014 12% Xi'an 11.3% Yangzhou 15.6% Changsha 9.1% The average annual increase in Chinese wages Shenzhen 13% since 2003 is 12%. DIFFERENCES IN U.S. AND CHINESE WAGE GAP 2000 – U.S. wages were 22x higher than wages in China. 2015 – U.S. wages will be less than 4x higher than wages in China. CHINESE CURRENCY IS LOWER DEMAND FOR CHINESE GAS IS GROWING STRONGER CHINESE GOobs EXPENSIVE 100 February 2014 75 50 In Feb. 2014: Chinese manufacturers cut more staff than 25 they had since March 2009. U.S. = $3.25 China = $15.00 Costs per thousand cubic feet July 2013. American natural gas is abundant and costs around one-fifth of the price of natural gas in China. Lower prices reduce electricity and production costs for manufacturers. New Orders Output The RMB has appreciated 25% more than the U.S. dollar since 2003. Output and new orders declined for the first time since July 2013. MANUFACTURING MOVING BACK TO U.S. Master Lock brings many jobs back to Whirlpool returns production of KitchenAid hand Milwaukee mixers to Ohio after 6 years in Huizhou General Motors AN ESTIMATED investing $1.3 billion in 5 plants across U.S. 50,000 Wal-Mart pledges $50 billion to Midwest source domestic products for new FACTORY JOBS HAVE MOVED BACK TO THE Ū.S. FROM CHINA OVER LAST 3 YEARS Made Here line Airbus will make Apple plans to create 2,000+ jobs in a new JetBlue jets in Alabama instead of its brand new Arizona production plant Tianjin factory Brought to you by PEPPERDINE UNIVERSITY Graziadio School of Business and Management http://mbaonline.pepperdine.edu/ Sources: http://www.huffingtonpost.com/2013/04/19/china-manufacturing-costs_n_3116638.html http://www.timesleader.com/stories/Made-in-China-era-coming-to-an-end,95037 http://www.ibtimes.co.uk/rising-wages-may-erode-chinas-low-cost-manufacturing-advantage-1431142 http://www.businessinsider.com.au/manufacturing-jobs-returning-to-america-2013-2 http://www.markiteconomics.com/Survey/PressRelease.mvc/0226a44496724665886d4d265e64cfb0 http://www.businessmirror.com.ph/index.php/en/news/opinion/26714-china-the-end-of-an-era http://www.2.macleans.ca/2014/01/02/why-factory-jobs-may-be-returning-to-america/ http://online.wsj.com/news/articles/SB10001424052702304587704577333482423070376 http://business.time.com/2013/04/11/how-made-in-the-usa-is-making-a-comeback/ http://news.cnet.com/8301-13579_3-57610796-37/apple-to-build-made-in-the-usa-manufacturing-plant-in-arizona http://www.forbes.com/sites/danbigman/2013/12/16/thanks-america-general-motors-announces-1-3-billion-investment-in-u-s-manufacturing/

The End of the "Made In China" Era

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The phrase "Made in China" embodies cheap labor, the outsourcing of American manufacturing jobs, and China's transformation into one of the world's economic superpowers. However, it seems the end of t...

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