Is manufacturing shifting away from China due to wage increases ?

An article in the Wall Street Journal (January 17,2013) describes shifts in manufacturing out of China to compensate for the 20% wage increase compared to 2005, as well as an attempt by the government to shift to more value added industries. Countries shifting out of China include Thailand, Singapore and South Korea. Countries gaining include Thailand, Vietnam and Indonesia. But some of these shifts also reflect the frictions between Japan and China and decisions by Japanese firms to shift production sites to offer options other than China. Will these new global supply chains shifted to locations with more difficult logistics suggest increased retail prices in the US? Will the potential role of China in providing higher end services at lower price points cause a shift in white collar labor into China, compensating for the increased manufacturing costs ? Given China’s large market with its continued growth, can manufacturers ever afford to abandon domestic Chinese manufacturing to be competitive in China?

About aviyer2010

Professor
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