Why is China the world’s factory floor?

1. Why is China the world’s factory floor? Is it only because of lower wages? Why will it be years or decades before Vietnam and other aspiring manufacturing destinations are ready to replace China in this role?
2. Since most manufacturing companies can rarely exit China altogether, what are the alternatives? Just as importantly, what are the costs and downsides of these alternatives?

 

 

Sample Solution

The Chinese economy thrives as a manufacturing powerhouse and the nation`s products seem to be everywhere. The majority of tags, labels, and stickers on a variety of goods proclaim they are “Made in China.” Because of this, it is understandable Western consumers might wonder, “Why is everything made in China?” some may thing the ubiquity of Chinese products is due to the abundance of cheap Chinese labor that brings down the production costs, but there is much more to it than that. In addition to its low labor costs, China has become known as “the world`s factory” because of its strong business ecosystem, lack of regulatory compliance, low taxes and duties, and competitive currency practices.

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