As the saying goes, “What goes around comes around.” For decades China has been the “go to” destination for US manufacturing that were looking for a less expensive and reliable source of offshore manufacturing.
What?
However, beginning in 2009 China companies have been opening US manufacturing facilities, looking to reduce their cost of manufacturing while taking advantage of the American market. How can this be? China is supposed to be THE place to get products manufactured, right? Why would Chinese makers of automotive glass, shoes, paper, and chemicals, to name a few, invest billions of US dollars on greenfield projects (greenfield projects are when a parent company builds a foreign operation from the ground up) here in the United States? In 2015 a Chinese paper company invested $2 billion in a paper plant in Virginia expected to employ 2,000 people by the year 2020. In 2016, China companies invested over $1.9 billion in greenfield projects in the United States. And this US manufacturing trend is continuing.
Why?
China companies in certain industries believe they can manufacture less expensively with US manufacturers for several reasons: Land is much less expensive in certain parts of the US than in China. Electricity, natural gas, and logistical costs are also less expensive in the United States than in China. Local governments in the USA offer incentives in the form of preferential policies in land and tax to Chinese companies. And, of course, as we all have been hearing over and over, wages in China have been growing much faster than in the US.
China companies are also manufacturing in the USA vs. China due to the ease of doing business in general, as US business activity is much greater and more prevalent than in China. Banks in China are heavily controlled by the government with strict collateral requirements. The business loan process takes much longer in China than it does in our country. Chinese companies are building US manufacturing facilities in America to be closer to the market and save on shipping costs. That, and the shorter time to market, allow these makers to adapt more easily and quickly to a volatile market.
Did You Know?
Average disposable income in the Unites States is about triple what it is in China. Daily average spending in the United States compared to China has been calculated as much as 17 times greater.
Another reason China manufacturers are manufacturing in the US is to get past any negative “Made in China” stereotypes. After all, a product manufactured by a Chinese company in their US manufacturing facility is, by definition, “Made in America”.
Finally, it has been suggested by various industry experts that the accelerated growth in Chinese greenfield projects is a direct result of President Trump’s talk on tariffs on Chinese goods. The bottom line is, the world continues to get “smaller” in terms of who is doing what where. It pays to know what your options are before making a decision.
How Can You Learn More?
At ITI Manufacturing, we’re experts in China manufacturing with 44 years of experience, and we just so happened to be headquartered near Houston, Texas, in the USA… so there you go.
With all the global changes happening, is it better for your company to manufacture your components and ready for retail products in China, the US, or elsewhere? The only way to be sure is to thoroughly investigate before making what could be a costly manufacturing mistake. If you are considering China as a manufacturing destination it would be wise to choose a company like ITI Manufacturing to partner with. We will provide a real landed price for your specific product(s), and guarantee no manufacturing defects no matter if the destination point is the China port, anywhere in the US, or any international port.
The only way to KNOW if China manufacturing is right for your company is to call ITI Manufacturing. The call is free. The quote is free. What you will learn is free.
Call us today at 888-574-6823.
