Manufacturing in the US Good for China

Pablo Valerio, International Business & IT Consultant | 12/28/2012 | 65 comments

Pablo Valerio
A year ago, I wrote a blog for Enterprise Efficiency called “Why High-Tech Brands Can't Manufacture in the US.” Now, some technology companies, most notably Apple, are announcing plans to start manufacturing some of their products on American soil.

While this is good news for American manufacturing jobs, in decline for decades, the Chinese are not (and should not be) afraid of these moves, even if they are taking away some jobs in the high-tech manufacturing sector. The fact is that the Chinese are struggling to keep up with the demand for mobile devices and consumer electronic products, so seeing some larger devices being manufactured somewhere else leaves them with the more profitable smartphone and tablet markets. Many experts agree that moving some of the final assembly to the US is good both for the American brands and Chinese manufacturers.

The Chinese have been frequently in the news because of working conditions. Foxconn, China's largest manufacturer, has been dealing with bad publicity because of accusations of long working hours, minimum wages, and operating some of its “manufacturing campuses” as something similar to concentration camps. But Foxconn has been expanding its manufacturing in other countries; now it operates factories in India, Japan, Brazil, Mexico, Hungary, Slovakia, and the Czech Republic.

Today, high-tech manufacturing is no longer merely about labor cost. It is about speed to market and flexibility. It makes sense to move manufacturing closer to the customer’s markets.

What will OEMs do? I believe most companies will start creating final assembly kits in Asia and then ship them to a final assembly facility in the final delivery market. This way, manufacturers can claim something like “Designed and Assembled in the US,” while the real production of most components still happens in Asia.

Dell is an OEM that has been assembling computers for the EMEA market within the European Union since 1991, first in Limerick, Ireland, and now in Łódź, Poland, as part of its European strategy of having production and logistics closer to customers. It also operates factories in Brazil and other non-Asian countries.

I don’t believe that moving some manufacturing back to the West will pose a threat to the Chinese dominance in high-tech manufacturing. I do believe it will help OEMs concentrate on more labor-oriented jobs; achieve higher volume of small, expensive devices; and strengthen their hold on the manufacturing of components and control of the supply chain, especially if the foreign manufacturing is done by Chinese companies using Chinese managing approach.

That's good news all around because moving assembly closer to final markets will help OEMs, especially if they don't have to get mixed up in international trade wars to make it happen.

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nimanthad   Manufacturing in the US Good for China   2/13/2013 11:51:00 AM
Re: Trade Wars can and will be a Very Serious issue going ahead.
Fair enough susan but I expressed what I felt and I have rights to express my ideas I guess :)
Susan Nunziata   Manufacturing in the US Good for China   2/12/2013 11:33:08 PM
Re: Trade Wars can and will be a Very Serious issue going ahead.
@nimanthad: True enough, although I personally hesitate to form an opinon about the individual people of any country based on the actions of their government officials or corporate leaders. 
nimanthad   Manufacturing in the US Good for China   2/10/2013 9:54:22 AM
Re: Trade Wars can and will be a Very Serious issue going ahead.
Well I have seen this many a times and most of the time the culprit was China. I seriously do not have anything against them. Its a lovely country with knowledgable people who can really do alot for the economy but sometimes they act strange.
Susan Nunziata   Manufacturing in the US Good for China   1/31/2013 10:17:12 PM
Re: Trade Wars can and will be a Very Serious issue going ahead.
@nimanthad: Ha, well said! 
nimanthad   Manufacturing in the US Good for China   1/31/2013 9:39:48 PM
Re: Trade Wars can and will be a Very Serious issue going ahead.
Yes Susan even I saw it. A pretty way of changing colors isn't it ?
Susan Nunziata   Manufacturing in the US Good for China   1/26/2013 8:37:20 PM
Re: Trade Wars can and will be a Very Serious issue going ahead.
@nimanthad: On a semi-related note, I read an Interesting article today in NY Times related to this topic of manufacturing in the U.S. versus China. The New York Times article, titled China's Army of Gratuates Faces Struggle, talks about the dearth of factory workers in China as newly minted college graduates in that country are seeking white collar jobs that are few and far between. Pretty interesting sign of the changing tides around the world.
nimanthad   Manufacturing in the US Good for China   1/26/2013 3:46:26 AM
Re: Trade Wars can and will be a Very Serious issue going ahead.
Yes Suzan that is where the knowledge of branding comes into play. If you know what to do and when to get the things done then you are right on track. That is what Hyundai has done.
Don K   Manufacturing in the US Good for China   1/24/2013 11:33:54 PM
Re: Good News
Why not batye ?
SunitaT   Manufacturing in the US Good for China   1/19/2013 10:09:42 AM
Re: where's the savings?
I wonder if Apple's prices will increase, since the U.S. will pay more for labor done in the U.S. than they pay for the labor done in China.

@freespiritny25, I doubt Apple will increase the price of its products because its facing immense competition from Samsung and because of this Apple shares have been under massive selling pressure. This will deter the Apple from increasing the product prices.

SunitaT   Manufacturing in the US Good for China   1/19/2013 10:03:50 AM
Re : Manufacturing in the US Good for China
I believe most companies will start creating final assembly kits in Asia and then ship them to a final assembly facility in the final delivery market.

@Pablo, thanks for the post. This will be a smart move by OEMs because  "Designed and Assembled in the US" tag will definitely OEM's attract more buyers from US who will buy the product believing that its made in US.

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