Please click here for a complimentary copy of our report on Nearshoring.

Many companies moved manufacturing operations and the supply chain footprint to China during the last decade, to take advantage of a seemingly limitless pool of available and inexpensive labor. New Chinese suppliers often supplemented or completely replaced existing operations in North America and Europe. Many of the costs categories that China attractive are losing their advantage, including raw materials, labor, tax incentives, logistics, currency, and inventory cost. Purchasing executives are taking a closer look at the total cost of ownership of their supply chain footprint. Some regions in eastern China which were once 50% or more competitive than Mexico are now becoming on par if not more expensive. Factors such as unpredictable changes in Chinese VAT refunds can add as much as 17% to the cost of a product or component. Recent tax changes are largely aimed at encouraging higher value exports, constraining raw material exports, and limiting toxic manufacturing processes. Such non-market driven forces will continue to change the landscape of Chinese competitiveness, especially for basic manufacturing.

In this white paper, Cost & Capital examines the developments of major cost components for manufacturing in China and Mexico and reviews recent history to determine the likelihood of new policy changes that will affect the shape of the supply base and the impact for current customers. This is the first step to anticipate the pending changes that will alter footprint, cost and availability for key products.  The report forecasts the elements of inflation and the estimated impact to Chinese cost competitiveness. Manufacturing in Mexico is evaluated to identify the future supply footprint for the affected industries.

To download a copy, please click here.