China is losing its status as the "world’s factory." But rather than a mere cheap outsourcing, the world is now seeing the country as the ‘hub of global supply chain.’
This was according to an annual HIS Markit survey of global procurement and purchasing executives, which was reported by CNBC.
For years, global companies have been outsourcing Chinese manpower and manufacturing operations to the mainland due to its cheap labor costs, but Chinese private sector salaries have been increasing in recent years.
“The share of respondents who agree that China is a low-cost sourcing destination dipped below 50 percent for the first time in 2016,” said Paul Robinson, economist at HIS Markit. “This was done markedly from 70 percent in the 2012 survey.”
According to the International Labor Organization, average wages have more than doubled in China since 2006. By 2014, the mainland’s average nominal monthly wage was $685, versus $212 in Vietnam, $408 in Thailand, and $216 in the Philippines.
The survey found that instead of avoid increasing costs in Shanghai and surrounding provinces by moving to cheaper regions, professionals opted to double down on familiar areas.
China, India, and Mexico were popular countries for sourcing; while U.S. and Europe registered their lowest ever results in the survey’s five-year history.
Some of the famous American brands that were made in China include Mattle, Inc., producer of Barbie and G.I. Joes; Levi’s Jeans, Converse Chuck Taylors, IBM personal computers, NBA uniforms, Fender Stratocaster, Brach’s Confections, Etch A Sketch, Ohio Art Company; Rawlings Baseballs, and Budweiser beers.