News / Economy

US Experts See Growing Desire to Curb Outsourcing to China

US Experts See Growing Desire to Curb Outsourcing to Chinai
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April 28, 2014 10:58 PM
For years, China's companies have been selling far more goods in the United States than American firms sell in China. This trade deficit hit $318 billion in 2013 but as VOA's Bernard Shusman reports from New York, there are some indications the situation is changing.
Bernard Shusman
For years, Chinese companies have sold far more goods in the United States than American firms sell in China. This trade deficit hit $318 billion in 2013.

A key reason is that many U.S. companies have transferred their manufacturing to China, a process called offshore outsourcing, resulting in the loss of American jobs. But the tide could be turning.

“As China has built its industrial manufacturing base, it’s become very attractive, so not only is it less expensive to manufacture there, but all of your suppliers are there, the whole infrastructure is there," said Rosemary Coates of Blue Silk Consulting, who has helped companies outsource. "But we’re seeing some reversal in that now. In the last year or two, there’s been a lot of attention paid to re-shoring. “

Re-shoring is bringing manufacturing and services back to the United States. Coates says the shopper plays a major role in where products are manufactured.

“The price of shoes may go up, in fact, if they are produced in the U.S. from U.S. products, but we expect to get most of the pricing back to within 10 to 15 percent of the international price," Coates said. "So you have to make a decision as a consumer whether you want to pay the extra 10 to 15 percent to buy a product that is made here.”

Major American corporations like Apple, General Electric and Dell manufacture in China, but sell in the United States.  With U.S. unemployment at 6.7 percent, manufacturing and jobs are a political issue in Washington. But experts say there are also good business reasons to bring manufacturing back to the U.S. mainland.     

“One of them is higher productivity of U.S. labor aided by advancements in computer technology," said Natalia Levina of New York University. "Other reasons might be the need to keep inventory levels low [which] means that manufacturing has to be close to consumption."
    
However, cheap labor in China and other countries is expected to continue to constrain re-shoring to the U.S. in the near term.   

“It isn’t a matter of just chopping off production and bringing it back to the U.S.," said Coates. "It’s really a thoughtful process of design, of automation, of innovation, and localization of the product and then being able to produce that for the local market.”

As imports from China continue to be unloaded on America's docks, analysts say it will take business ingenuity to develop new products, new markets and new American jobs.

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Comments
     
by: Not Again from: Canada
April 29, 2014 10:05 AM
And therein lies the stupidity of the current model of GLOBALIZATION, because it does not restrict trade deficits. Over time, the deficit will just continue to grow, because of the economic advantage of ever increased greater production scales. In addition, this unrestricted Globalization, is in fact poisoning and killing the people of China. China has become the World's's factory concurrently it has become the World's most polluted country, which will result in the premature deaths of hundreths of millions, the next generation of China, will pay a heavy price for this terrible situation; while at the other end, great social unrest will cause massive probles from un/under employment, civil unrest, displacement, and potentially the collapse of nations.

by: max from: london
April 29, 2014 5:38 AM
"10% to 15% increase" not even in your wildest dreams. The price will shoot up by a minimum of 80% to 95% if produced in the US. Just imagine paying $2000 for an iPhone. Id rather keep production in China or India, thank you very much. Technology will be limited to a privileged few if we re-shore.
In Response

by: Brilliant from: USA
April 30, 2014 7:24 PM
Soooo...then let's keep sending production and jobs to China and India...so that they can be unloaded back in the U.S. I can't wait to see how all the unemployed/underemployed will find due to pay for their iPhones. Oh...I guess it probably won't matter much -- because as we increase the industrial and technical know-how of China and India -- it will be a moot point when THEIR companies become the brands flooding the market. Why do you think Walmart is doing their Made in the USA push? THEIR customers have no jobs...and as such...their customers have NO MONEY to spend in their stores.

In 20...30...40 years people are going to look back and think -- what a bunch of idiots we were...

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