New economic trends in global manufacturing: why are manufacturers leaving China?

Abstract

For decades there has been a common manufacturing allocation decision pattern consisting on driving production plants to low cost countries. Nowadays, some of those destinations are getting especially expensive in terms of labor. This is the case of China whose manufacturing competitiveness erodes as wage gap narrows. New decisive factors come to the fore: labor flexibility and reforms, clusters of excellence, logistics and infrastructure, government incentives or tax regulation. Manufactures respond in different ways. Some are moving, others leave and part of them come back home. New strategies are studied in this report which main aim is to draw a global picture of the multiple movements currently seen. Spanish manufacturers are not indifferent. A number of Spanish companies shared their points of view and corporate allocation experiences for the elaboration of this report. From their interviews we learn and confirm our expectations about this new global trend in manufacturing. Those companies are: Babyauto, AYB Hislabor Décor SL, Ficosa SA, Orbea Sociedad Cooperativa Industrial and Papel Aralar SA.