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Why Are Companies Moving Manufacturing out of China?

NovaAdmin · April 18, 2022 ·

Manufacturing is a major industry in China, as we know. A third of supply chain leaders plan to move manufacturing out of China by 2023, according to Gartner research.

There are several reasons why companies are moving manufacturing out of China:

  1. Rising Labor Costs: China's labor costs have been rising steadily in recent years, making it less cost-effective for companies to manufacture there. As wages increase, the cost of production also increases, reducing profit margins for companies.
  2. Trade War and Tariffs: The US-China trade war has also contributed to companies moving manufacturing out of China. The imposition of tariffs on Chinese goods has made it more expensive for companies to import goods from China, prompting them to consider relocating their production facilities to other countries.
  3. Supply Chain Disruptions: The COVID-19 pandemic highlighted the vulnerabilities of global supply chains, with disruptions in manufacturing and transportation affecting the availability of goods. Companies are now looking to diversify their supply chains and reduce their dependence on a single country like China.
  4. Intellectual Property Concerns: Intellectual property theft and counterfeiting have been longstanding concerns for companies doing business in China. Many companies have had their products or technologies stolen, prompting them to seek other manufacturing locations with better intellectual property protections.
  5. Political and Regulatory Risks: China's political and regulatory environment can be unpredictable, with sudden policy changes or crackdowns on certain industries. This can create uncertainty and risk for companies doing business in China, prompting them to consider moving manufacturing to more stable and predictable locations.

Overall, the combination of rising costs, supply chain disruptions, geopolitical tensions, and intellectual property concerns has made many companies reconsider their reliance on China for manufacturing and explore alternative locations.

About NovaLink

As a manufacturer in Mexico, NovaLink employs a unique approach that transcends the traditional model of shelter production. More than just the location of your manufacturing, we would like to become a partner in your manufacturing in Mexico. You will be able to relocate or initiate manufacturing for your company in Mexico in a low-cost labor environment with very little delay or up-front costs. Find out how we can help you by handling the manufacturing process.

There are NovaLink facilities in the border cities of Brownsville, Texas, Matamoros, Mexico, and Saltillo, Mexico.

Contact NovaLink Today

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