Cheap = China…..A thing of the Past

A report from Bloomberg Business week reports on the changing nature of Cheap China. This article looks at the growing discrepancies with the costs associated with manufacturing in China. The article states that while manufacturing in Mexico can appear to be slightly more expensive on the surface the “total cost of ownership” – i.e. expenses associated with things such as storage and delays – must be included in the final price. In this regard the so-called China price, which always seemed to be at least 40% below U.S. costs on everything from bedroom furniture to telecom gear, isn’t so low. Studies from firms such as Alix Partners report that the total cost of doing business in China is steadily rising; they cite figures such as in 2005 the cost of goods manufactured in China were approximate 22% percent lower than those goods manufactured in the US, however, by the end of 2008 that price gap had dropped to an average of only 5.5%. ip What most people don’t realize is that as of 2009 the cost to manufacture in Mexico is about 20% less on average than to have those same goods produced in China.

Read the entire article here

 


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