China's manufacturing cost advantage over the US is shrinking. Within five years, a Boston Consulting Group analysis concludes, rising Chinese wages, higher US productivity, a weaker dollar [rise of the yuan] and other factors will reduce the cost gap.
Companies must undertake a rigorous, product-by-product analysis of their global supply networks, that fully account for total costs - not just factory wages. For many products sold in North America, the US will become a more attractive manufacturing destination.
REASSESS YOUR CHINA STRATEGY. For products that have a high labor content destined for Asian markets, manufacturing in China will remain a valid choice. But for the rest, China should no longer be considered the default "low cost producer."
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China's manufacturing cost advantage over the US is shrinking. Within five years, a Boston Consulting Group analysis concludes, rising Chinese wages, higher US productivity, a weaker dollar [rise of the yuan] and other factors will reduce the cost gap.