Why China Will Be Hard to Leave

Wednesday, August 27, 2008 7:41
Posted in category Invest in China

I was recently interviewed for the India based Daily NEws and Analysis on why firms would find it hard to leave China.

It was an interesting spin on the recent discussions of China losing its cost advantage, and the resulting article  Why China is so hard to leave had some really good quotes that worked on this question:

Where else but in China can you source the huge quantity of goods that Wal-Mart needs, for instance?” asks Jing Ulrich, chairman of China equities at JP Morgan Securities.

If I want to make 2 million pairs of jeans and I have the fabric, I may go to Chennai, but I cannot wash it because there is no water,” says Arunchalam. “The entire processing industry is dying in India because of inadequate infrastructure.”

if you are interested in learning more about this topic, I suggest taking a few minutes to read the article.  Not relying just on consultants, this article brought in some people operating in the industries that are moving around right now and that has added some nice color to the picture.

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3 Responses to “Why China Will Be Hard to Leave”

  1. Samuel says:

    August 27th, 2008 at 8:34 am

    China has huge continuous and almost free labor force , by the effect of china’s GDP ,only high GDP growth rate( probably above 7%) can make lower unemployment rate… i think that maybe the point .

  2. adam says:

    September 12th, 2008 at 9:13 am

    Did you see: http://www.mckinseyquarterly.com/Operations/Supply_Chain_Logistics/Time_to_rethink_offshoring_2190

    Of course, there are huge costs in getting out of contracts, finding new suppliers etc; but it is interesting that McKinsey think the cost advantage of China (in pure cost terms, only) has changed so much!

  3. Rich says:

    September 12th, 2008 at 9:48 am

    Adam

    I have yet to see any real evidence that companies are rethinking their offshoring on any large level. It is surely detouring some from considering China as a new option to their model, but the stories of large firms returning to their home countries it is still only annecdotal.

    In fact, export volumes and value are still increasing – all be it at a diminishing growth rate – but it is still growing.