Losses from flight of man­u­fac­tur­ing have to be off­set

China Daily (Canada) - - LIFE -

About 30 years ago, the cen­ter of global man­u­fac­tur­ing started mov­ing from theWest to Asia, most no­tice­ably to China. Now the pen­du­lum has started swing­ing in the other di­rec­tion, toWestern Europe and the United States, with sports goods gi­ant Adi­das an­nounc­ing it will es­tab­lish new fac­to­ries in Ger­many and the US.

The pos­si­bil­ity of man­u­fac­tur­ing flow­ing from China to theWest has been in dis­cus­sion for some years now but few seem to have taken it se­ri­ously, with most Chi­nese dis­miss­ing it as a false alarm. Well, the alarm was not false.

Adi­das CEOHer­bertHainer re­cently told the Nikkei Asian Re­viewthat the com­pany will soon open a fac­tory in­Ger­many to meet the ad­di­tional mar­ket de­mand for its shoes and set up an­other in theUS next year. Au­toma­tion and 3D print­ing tech­nolo­gies will greatly lower the cost of la­bor in the rel­a­tively ex­pen­sive Western coun­tries, he said, and thus make the shift worth­while.

Adi­das’ new­strat­egy should set off alarm bells for China as the global tech­nol­ogy rev­o­lu­tion has made pos­si­ble what used to be im­pos­si­ble even till re­cently. The cost of la­bor in China is low, which, along with its com­pet­i­tive pref­er­en­tial poli­cies for for­eign in­vestors and a huge con­sumer mar­ket, has cre­ated the il­lu­sion for many that it is al­most im­pos­si­ble for global in­vestors to shift their pro­duc­tion bases to the ad­vanced economies where pro­duc­tion costs are rel­a­tively high.

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