China cost advantage for manufacturing to disappear by 2015 ?

A report by the Boston Consulting Group (BCG) summarized in Supply Chain Digest (June 6, 2011) describes wage growth in China of 17 % a year (vs 3 % in the US) , increasing appreciation of the Yuan and labor productivity increase of 10 % resulting in a labor cost level in China that will be about 69 % of US costs by 2015. At that level, parts of the US will be the least cost manufacturing location in the developed world. But Mexico may also benefit from such cost appreciation in China. Should companies rethink their China locations now in preparation for such continued cost increases ? Are these reasons beyond cost, such as specific capability and quality or demand destination that would continue to justify China as a manufacturing location ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , . Bookmark the permalink.

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