Manufacturing Dilemma: Leaving China but Going Where?

Oct. 4, 2012
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.

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.”

About the Author

Adrienne Selko | Senior Editor

Focus: Workforce, Talent 

 

Bio: Adrienne Selko has written about many topics over the 17 years she has been with the publication and currently focuses on workforce development strategies.She is also a senior editor at Material Handling & Logistics and EHS Today

Editorial mission statement: Manufacturing is the enviable position of creating products, processes and policies that solve the world’s problems. When the industry stepped up to manufacture what was necessary to combat the pandemic, it revealed its true nature. My goal is to showcase the sector’s ability to address a broad range of workforce issues including technology, training, diversity & inclusion, with a goal of enticing future generations to join this amazing sector.

Why I find manufacturing interesting: On my first day working for a company that made medical equipment such as MRIs, I toured the plant floor. On every wall was a photo of a person, mostly children. I asked my supervisor why this was the case and he said that the work we do at this company has saved these people’s lives. “We never forget how important our work is and everyone’s contribution to that.” From that moment on I was hooked on manufacturing.

I have talked with many people in this field who have transformed their own career development to assist others. For example, companies are hiring those with disabilities, those previously incarcerated and other talent pools that have been underutilized. I have talked with leaders who have brought out the best in their workforce, as well as employees doing their best work while doing good for the world. 

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