Is the Politburo in a Tizzy Over Reshoring?


When it comes to creating a harmonious society, the Communist Party in China pays far greater attention to fundamental economics than most western countries do. Keeping GDP growth above certain levels is not just a goal – it is religion for the politburo’s economic planners that know that the country is held together by growth and economic improvement at all levels, not ideology. Given this foundation, the questions that this blog from Supply Chain Management Review raises are fascinating indeed.

The author, Rosemary Coates, recently spoke at an event in Shanghai, and these are some of her direct observations from Chinese manufacturers/suppliers:

“As I described the reshoring movement in America, they were fascinated. ‘How can it be that Americans will pay so much more for American-made goods?’ they asked. I explained about the new 'economic patriotism' that has enveloped the country. Americans want to rebuild the economy and believe that bringing back manufacturing is one way.”

“But products must also be cost competitive. To achieve this, reshored manufacturing must be very automated including the use of robotics, 3D printing and 5-axis milling. This is not a return to 1960’s manufacturing … the costs can be very competitive with China, when production is fully automated and when the total cost of ownership is considered … That got their attention.”

There are those with far greater (and better) expertise and opinions about the Chinese economic super cycle than me. But it is becoming more clear that reshoring and supply chain localization should have any government that sees a primary competitive advantage in its manufacturing output as labor cost worried. Such arbitrage opportunities are increasingly becoming shorter and shorter lived – not to mention the added attention companies are paying to supply chain corporate social responsibility concerns and initiatives that are magnified in China and many other developing markets.

First Voice

  1. Rosemary Coates:

    Thanks for your comments, Jason. I have been going to China for the past 15 years and have witnessed the economic miracle based on the Chinese manufacturing powerhouse. Reshoring will probably affect 15-20% of this production. But more importantly, it will cause a shift in global manufacturing strategies for many US companies. Many of my clients are now considering what to Reshore and what to manufacture in each region. This is an evolution in global manufacturing thinking like we have never seen before.

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