China is similarly dominant for manufacturing. It's no longer about cost, it's about the concentration of expertise and cross-fertilization that results. Because of automation nobody will ever have the cost advantage that gave China its current dominance so China will remain the hub for the foreseeable future.
Speaking from firsthand experience, if you want to have anything with a circuit in it prototyped, picking a Shenzhen area factory to work with has many advantages. You can have new circuit boards printed and tested within a day. This kind of ecosystem may be hard to replicate elsewhere.
On the other hand, for many other physical products proximity to the end customer is becoming the primary concern. Consider that as real wages in China are increasing, you’re looking at a 20-30% wage increase over the last 4-5 years in China. This means that any cost advantage over other countries is rapidly closing. Chinese raw materials and electricity are no cheaper than in the rest of the world. Due to new factors like increasingly stringent environmental regulations, many of these other inputs are increasing in cost. (http://www.scmp.com/news/china/economy/article/2058175/chine...)
If I want to have a plastics part mass produced, there are a number of regions in the US where there is near-parity with China when you factor in shipping costs, insurance, tariffs, the costs of delays and defects etc.
For industries like textiles, there’s already been significant flight to India and Southeast Asia.
And Chinese brands like Li-Ning grabs all other markets.
The vast majority of software are written a) in house b) outside of SV c) in Java and C#
It doesn't even require any human experts to run, so why does it matter where the experts live?
For now, there is at least an initial "activation energy" hump to get over in terms of training people to assemble shoes. A sneaker or dress shoe may seem simple, but there are hundreds of individual stitches that are essential for a quality product. If you're interested, look into the story of American Giant. To make clothes in North Carolina, they had to implement extensive training for the entire supply chain for their clothing.
Some simpler footwear products are actually already made in the U.S. The custom orthotics for my running shoes were measured for and made in the U.S.
Second - all the other costs in low wage countries are also a lot lower. Combine that with how absurdly cheap international shipping is and there is no reason to relocate the manufacture of low-margin goods to the US until you are really starting to talk about the costs of automation being so efficient the extra pennies on shipping will make a difference in earnings. Given the expense of maintaining real assets in the U.S., i.e., buildings (utilities, maintenance, insurance, taxes, building), this is likely to be a while.
A lot of this work will be automated in the coming decades to the point where the effect of wage costs is marginal. In addition, the salaries in developing countries will continue to increase, eventually catching up Western nations. At that point the main factors are probably tax/import policies, price of enercy etc.
2. Currency Exchange Rate (i.e State Manipulation)
3. Raw Supply Chain Location
4. Government Subsidies
5. Large Domestic Market
Plenty of reasons why the shoes may continue to be made in China or in the Region.
Companies move for a number of reasons, Raw Wages are often not as high on the list as people believe, at least not these days. Government Regulations, Taxation, and other non-wage factors are much higher
The other factor I imagine is proximity/availability of raw resources, and refineries of raw resources: if you're not shipping those shoes across the world, you still have to transport the plastic, leather, rubber etc to make them.
- Location selected based on cost of labor.
- Major port is developed to deal with large amounts of goods
- A few more factories/industries start in same area due to port accessibility
- Refineries are built to be close to location of usage (now they import raw materials instead of refined materials)
- More factories are built due to easy availability of resources + accessible port for export
- Labor gets more expensive, but economies of scale of factories + refineries means it is cheaper to stay in place then to move elsewhere
- Automation slowly displaces labour.
As a thought experiment if there was a magical 3d printer that could take any number of raw materials as inputs and combine them in any way would it become more efficient to ship a mix of raw materials to each end consumer? Say I consume x amount of rubber, y amount of cotton, z amount of plastic, etc in my consumer goods in a day, week, month whatever. Could it be more efficient to get the rubber and cotton to my door and run them through the printer than it would to build the shoes, basketballs and t-shirts somewhere else and ship them?
It's a bit like Blue Apron etc; you pay a small premium for the theatre of doing the assembly step yourself.
Proximity to resources is priced in to 'cost', no?
Of course then things would be expensive...
They compete by being extremely efficient with their use of labor hours and cutting waste. Just-in-time everything.
I'd be careful to extrapolate your direct experience to indicate trends.
Hoenstly, the chemicals are horrendus and chrome's days are numbered in any capacity thanks to new mirror finish water based paint. Even china will soon ban hex chrome process, by proxy if not explicitly.
Infrastructure, price of electricity, political stability, availability of cheap land.
why is this so difficult for you to imagine?
i mean, i'm pretty sure i know why, but ask yourself.
The fully automated shoemaking machine could be placed anywhere the raw materials could be shipped.
i agree, there's no way on earth any chinese firm could have the best shoe-making robot plant in 20 years. we all know chinese people aren't smart enough for that.