Quote:
Originally Posted by HansTWN
Yes, they are starting to move out of China. But don't forget that all the major alternatives combined don't have half the population of China. And it is not just a big factory that has to move. The whole industry, including suppliers, has to move to recreate the efficiencies that exist in China.
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Quite so.
But let's not forget that entire infrastructure was not always there; it came there from elsewhere and it can just as easily, over time, move elsewhere.
Plus there are other regions that could arguably ramp up comparable supply chains and achieve competitive economics for at least some products.
One area that comes to mind is northern africa, which has seen a boost of "dirty industry" because the european carbon tax system benefits companies that outsource energy-intensive operations outside their home borders. Similarly, the eastern european countries have been ramping up their economies by providing low-cost manufacturing for western european companies.
Closer to the US, Mexico and Latin America can and do link up to offer up a full mix of labor classes and facilities.
Brazil alone has both high-tech and low cost labor within its borders.
So does India. (If they ever de-bureaucratize they would be an even more formidable player than they are.)
We're not looking at a zero-sum game here; one country/region's gain doesn't have to come at others' expense. But there are certain types of economic activity that will continue to migrate from region to region. That is why China, like Japan and S.Korea before them, are looking to move up the value-add scale, after all. They can see the day when the supply of cheap, skilled labor dries up and certain segments of manufacturing move on.
China, Inc is getting a good run and it probably won't be too soon (there is still room to move inland) but sooner or later things will start to balance out. Nothing lasts forever.
The only certainty is change and it usually comes faster than most people expect.