China is no longer a slam dunk for manufacturers looking for the lowest cost for operations.
In fact, a new study by the consulting firm AlixPartners estimates by 2015 the cost of outsourcing manufacturing to China will be equal to the cost of manufacturing in the U.S.
“The Chinese manufacturing cost advantage has eroded dramatically in the last few years,” said Steve Maurer, AlixPartners managing director. “If you go back to 2005, it was pretty common for landed cost from China to be 25 to 30 percent less than the cost of manufacturing in the United States. Based on our analysis, two-thirds of that gap has closed.”
Maurer said higher labor wages, the rising value of China’s currency, and the cost of shipping goods from China to points around the world have made manufacturing in China more expensive.
“If trends continue, the China cost is going to be on par with U.S. cost in the next four to five years,” said Maurer.
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