Many companies have decided to leave China based on factors including increasing labor and transportation costs, as well as a desire for faster customer delivery.
Almost 50% of manufacturers and importers surveyed for the Spring 2012 Global Retail Manufacturers and Importers Survey conducted by Capital Business Credit said they would consider moving with 26% actually making the move.
"While we continue to believe that China will remain a strong manufacturing partner for retail goods importers in the U.S., there is a shift taking place to either low cost manufacturing destinations like Vietnam and Pakistan, or on the opposite end of the spectrum, to cities in the U.S. where importers can keep an eye on quality control and produce goods faster due to the elimination of overseas shipping times," said Andrew Tananbaum, executive chairman of CBC.
When asked which countries they are moving their manufacturing to, the U.S. was most popular at 31.3%.
Other countries that manufacturers chose were Vietnam at 18.8%, Pakistan at 10.9%, Bangladesh at 9.4% and the Philippines at 3.1%.
As the trend toward moving to Vietnam has been happening for awhile, the country has been increasing its production capacity, explains Tanabaum. However Pakistan still has a vertical production structure. And Bangladesh functions more like a contract manufacturer, he says, as many of the supplies must be imported.
“Each market has its specific financial considerations as well,” Tananbaum added. “For example in Bangladesh, a company would have to pick up more of the financing than they would if they were operating in China. For Bangladesh you have to be able to finance the entire order-to-cash cycle.”
