China Falls Out Of Fashion For Some U.S. Brands

www.npr.org...

It would seem the the raising costs involved in Chinese manufacturing, theft of IP and now the Trump tariffs are finally changing the equation on whether or not manufacturing in China is a good business decision.

7 years ago when I was studying for my MBA the issues revolving around Chinese manufacturing where a constant theme. Than it was mostly a consern over IP theft and the real cost that IP theft had on the business. Unfortunately back than all other advantages to manufacturing in China out weighed the negatives of IP theft; but all of the professors and business speakers felt something had to change or the US would find itself losing to much of its competitive advantage to China. Its good to see things starting to change; hope we can sustain the trend of moving out of china.

A lot of American companies that make or buy products in China are starting to rethink that, as a new round of tariffs takes effect this weekend. But Robert D'Loren doesn't have to worry. As CEO of the Xcel Brands clothing company, he began moving production out of China some time ago.

"You never want to have all your eggs in one basket," D'Loren said. "China was easy. In retrospect, probably if you had 90% of your production in China, that wasn't good risk-management planning."

While I think the theft of IP should have been enough to make US companies rethink their Chinese manufacturing strategy; its good to see that the tariffs are accelerating that realization.

"The truth is that the trade war is a little bit of a wake-up call for many companies," said Gerry Mattios, a Singapore-based vice president with Bain & Company consultants.

He says rising labor costs in China were already causing some companies to look elsewhere for suppliers, and the Trump tariffs have accelerated that. But other countries will need a lot of investment to match the expert manufacturing base and robust shipping network that China has built over the past two decades.

But as companies move out of China they aren't coming back to the US yet.

Trump has urged companies worried about tariffs to move production back to the United States. But only about 6% of the companies operating in China are considering that, according to the American Chamber survey.

Harry Moser, who runs the Reshoring Initiative, estimates that about 25% of those companies would find manufacturing in the U.S. competitive if they took tariffs, transportation and all other costs into account.

"Probably they made the right decision going to China when the wages [there] were so low," Moser said. "Probably they should have reevaluated it five years ago. But now that they feel they have to bring a lot of work out of China, now is the perfect time to reevaluate the U.S. as an alternative."

Would a renewed national effort to "Buy American" help push companies to move back to the US?

When this was tried a few decades ago it didn't work because the advantage to off shoring were just to great to overcome. But now that companies are already reevaluating their cost structure and are looking to move "somewhere else"; would a show of American purchasing nationalism help push them over the edge to come back to the US?

It's because of the fully weaponized Chinese communist party and how they treat everyone else. They will bribe, buddy up, be your friend if you make political concessions, and then they will steal and rob you for what you have, and then use what they have stolen from you to kill you and harm you with it. The acts of true wickedness and evil.

But the things above aren't why some US companies would exit, they only exit if they stand to lose financially.

The free market is to far gone into the global market.

As long as the top capitalists are around, so will the nation or geopolitical location be there to fulfill it to get into the capitalism game. China took full advantage of it, and even if it leaves their lands it won't hurt them that much.

America has everything to lose since they have been top dog for a while now, so aggression will be the norm for the time being. Remember, China's money is virtually worthless, it's more of just a formality, that's why is devalued so low. All socialist or 'communist' nations have followed this trend.

a reply to: strongfp

"Capitalism" will always be king. But ...

companies would find manufacturing in the U.S. competitive if they took tariffs, transportation and all other costs into account.

Along with saving IP and really monetizing ALL the costs involved in off shoring (companies do not do a good job of this) .... coupled with American consumer base that demands more "American made" products... could the "capitalism" equation tip the scale back to American manufacturing?


Americans are willing to spend 10$ on a cup of coffee. Why can't they be persuaded to buy a washing machine on premium for made in America?

a reply to: DanDanDat

They will almost certainly not come back. They will move to another oversees cheaper location. The benefit is those places, like the Philippines, won't be our enemy we are literally funding to compete with us.

a reply to: DanDanDat

would a show of American purchasing nationalism help push them over the edge to come back to the US?

So this guy hasn't been buying American the whole time? Good to see NPR praising the Trump tariffs though.

Too bad they don't know the difference between "then" and "than".

a reply to: OccamsRazor04

Some will go to other places overseas and some will return to the US. Either way it screws the Chinese.

a reply to: DanDanDat

I honestly believe that in the core foundations of any sort of economic, political or social system is the answer to a lot of questions.

Like I said earlier, once the free market hit the global market, that was it. End of the line for American prosperity. And the only answer to it is a quick fix that will inevitably fail, and that's to make a irrational decision to essentially castle yourself in.

What was made in China, will just go to India or Vietnam.

A good example is General Motors, once the largest manufacturer of automobiles in the world, housed the most prestigious brand on earth Cadillac, and it's now become just another Toyota copy-cat, and Cadillac is lowest on the scale for luxury cars.

Here's a video that I think you should watch, it really does tell a tale of where American manufacturing went wrong in a sort of sense. And it almost has to do with greed, and how workers are treated to be honest.

I guess it would make sense .

To squeeze China to the point companies start departing. Those companies either migrate home or negotiate with places like the EU, Taiwan, South Korea or Japan to set up shop . Those nations seeing that the US market is opening up and to help with negotiations of potential companies .Then feel pressure to come to the table and make a deal on Tariffs .

If all that happens China would need to make a choice over a possible collapse their economy or to kiss trumps ring.

A lot of variables and I know it’s not that simple.

But it almost sounds like it was planned .

a reply to: DanDanDat

just finished a project management course for my masters, part of it was pick a country to use to enter the global market, probably 80% of my class all chose China.

I kept asking what about the tarrifs/trade war is it really a smart idea to try and enter the global market under that threat, the majority all seemed to feel it wouldnt last long and China would still be the same option.

I actually chose Bulgaria myself.

originally posted by: Irishhaf
a reply to: DanDanDat
the majority all seemed to feel it wouldnt last long and China would still be the same option.

Now that is the achilles heel of American politics, and American business in general, no one cares about or attempts long term strategic maneuvering.

Say Trump is ousted next November? Will the new Democrat president try to build on these gains or will they dismantle all of the progress to spite Trump or just to make some angry voters happy?

Both our politicians and our business leaders wouldn't know what a 5 year plan was if it bit them in their @ss; let alone a 10 year or 15 year plan. All our competitors? They have plans that range much farther than 15 years.

originally posted by: funbobby
a reply to: OccamsRazor04

Some will go to other places overseas and some will return to the US. Either way it screws the Chinese.

That's how I see it.

a reply to: OccamsRazor04

people seem to exaggerate how much stuff is made in china, I buy cheap crap at walmart all the time that is made in America. Anything that doesn't change very much or take much handwork can be manufactured in America for not much more than abroad and then you don't have the expense to send it here. Socks and t shirts at walmart are made in America because socks are easy to make by machine and don't change much. Inexpensive pants have to be made abroad because of all the seams and constantly changing styles.

a reply to: funbobby

Enough is made there that I try to never buy made in China and sometimes still end up having to. But as you say usually there are options.

a reply to: OccamsRazor04

it depends on the item, iphones change so often it is cheaper to have Chinese people make them by hand than to retool robots or an automated assembly line every time the product changes, but that is only because historically Chinese labor has been cheap. The will have the same problem India had with the telemarketers, eventually there were so many Indian telemarketers and customer service representitives they demanded higher and higher wages that now most of them have been replaced by Southerners and AI except for some things, like tech support. Those Indian phone support people who remain are those who do complex tech support and they are much better communicators than the ones from back in the day when everyone was outsourcing to there.

originally posted by: DanDanDat
Both our politicians and our business leaders wouldn't know what a 5 year plan was if it bit them in their @ss; let alone a 10 year or 15 year plan. All our competitors? They have plans that range much farther than 15 years.

I'm not sure where you get that from. Sure, politicians only look as far as the next election but I guarantee that any business worth anything has 5, 10, 15 and even 20 year plans. Say what you will, but corporate America is still in the lead when it comes to innovation and profit.

originally posted by: LogicalGraphitti

originally posted by: DanDanDat
Both our politicians and our business leaders wouldn't know what a 5 year plan was if it bit them in their @ss; let alone a 10 year or 15 year plan. All our competitors? They have plans that range much farther than 15 years.

I'm not sure where you get that from. Sure, politicians only look as far as the next election but I guarantee that any business worth anything has 5, 10, 15 and even 20 year plans. Say what you will, but corporate America is still in the lead when it comes to innovation and profit.

I came to my opinion over many years of observation, independent study and a few years of higher education.

Corporate American Leadership is driven to maximize share price every quarter. The solvency of the company 5, 10, 15 years in to the future take a distance second to short term gains.

a reply to: DanDanDat

Manufacturing for most companies has already been moving to places like India and Vietnam. This is why it's silly to compete on the lowest cost of labor... someone will always be lower.

Not all companies do this, but many who manufacture in China and are the leaders in their fields build in China knowing that China will flood the market with similar goods after a couple years. In doing so it pushes any competitors who can't innovate into accepting much smaller margins on products. It's a good strategy as long as you can come up with something new for your product every 2 years or so.