Free Sourcing And Manufacturing In China Essay Sample

In the past 25 years China became a country where a large number of multinational companies manufacture their products. The shift of the production capacities to China was caused mainly by the very cheap and skilled labor with high productivity in the main Chinese cities. Moreover, China’s population may become a target audience for the foreign companies in the future. Nevertheless, the foreign companies started to face some challenges in particular increased costs of production and appreciation of the Chinese currency.
The Chinese labor force can work with high productivity and the Chinese government created a very good infrastructure so that more foreign companies could open their production facilities. As the result, production became very flexible and reliable process, and the logistics is much quicker. So China is one of the best countries for outsourcing nowadays.
In addition, the large Chinese population may increase the revenues of the companies in the future, because the people’s incomes are growing and the Chinese customers can afford buying much more products. The rising middle class will be the driver of the Chinese economy in the future and the foreign companies realize that.
At the same time, the companies will have to rethink their business strategies, because the costs of manufacturing are increasing. The population is ageing, the land and raw materials are more expensive than before, and the Chinese currency appreciates which means that exports from China are more expensive.
In conclusion, the foreign companies will need to take into account the changes mentioned above. There are several options for them: to move production to the areas or countries where the labor costs are still very low; to diversify production or increase production by automation; to focus on China more as a market rather than a place for outsourcing. Some of these measures may help the foreign companies to stay competitive at the global level.