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COFES Blog
Aug
5
Written by:
Russ Henke
8/5/2008 7:34 AM
One in five German manufacturers pulling production out of China:
On August 4, 2008, Germany's Der Spiegel reported that "China lost its status as the world's cheapest country for manufacturing some time ago." Now momentum is "shifting away from outsourcing to the Far East, with one in five Germany companies pulling production out of China."
Chinese workers, they say, are getting too expensive. Many German companies cite "fast-climbing labor costs and pesky production quality problems" as reasons they are either "searching for countries with lower wages [or] returning production to Germany."
Hans Röhm of the consulting firm Deloitte said that "the companies that are most likely to return to Germany are those that outsourced production out of cost considerations -- including the consumer goods industry and textiles, which both produce in mass quantities."
However, "German manufacturers of high-quality goods are also looking at China with a more critical eye," according to Der Spiegel. "A dip in quality for these companies could damage their reputation."
One wonders if U.S. companies who have outsourced to China will follow suit, or will they simply seek other outsourcing locations around the world where labor is still cheap? Maybe the recently increasing cost of transporting products will discourage ongoing outsourcing?
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