Guess Who’s Moving Factories to America to Lower Costs
- Submitted by: Love Knowledge
- Category: Politics
The post Guess Who’s Moving Factories to America to Lower Costs appeared first on WhoWhatWhy.
When Donald Trump speaks about the barriers that US companies face, he often mentions a high corporate tax rate and the ability of other countries to produce more cheaply. Ironically, China, which most often draws Trump’s ire for doing so, is now facing many of the same problems.
In fact, in one case that attracted a lot of attention in China, an executive said it is more profitable for his company to produce goods in the US than domestically.
The label “Made in China” has long been associated with bulk goods manufactured cheaply in Asia. But even as Trump rails about China — while his own companies still produce products there — China’s dominant role as the “world’s factory” is already eroding.
This is not only because of fierce competition from countries with even lower production costs, but because its companies are facing structural problems which are a drag on the domestic manufacturing sector.
Taxes on manufacturing, for example, can be up to 35% higher in China than in the US, Cho Tak Wong, founder and chairman of China’s largest auto glass manufacturer Fuyao Glass, told the Chinese business publication Yicai in December.
The interview attracted a lot of attention in China, with many business leaders echoing his sentiments. In particular, they complained about the burden of taxation and brought up other cost issues that are making the lives of Chinese manufacturers harder.
Cho noted that all of these reasons now make it more profitable for his company to produce goods in the US instead of manufacturing them in China, and exporting them. And he has put his money where his mouth is.
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