China and the US are in a trade war. There is a lot of tension between the countries regarding trade. The import duties on the US goods coming to China is huge while a similar step is implemented in the US. The steps taking by one country are matched by the other country. This war between two supremacies is not affecting anyone else apart from the two countries participating in it. This trade war is going to be on for a long time and because of this, the countries around these two powerhouses are benefitting.
China has always been one of the biggest exporters of goods. The Chinese economy is based around the export of goods and cheap labor costs. There was a time when almost all the big companies wanted to set up factories in China and export their goods from there. However, the time is now up for the same as the factories are moving and moving for good.
The unusual factory movement
China is a hub for most of the manufacturing plants. These plants manufacture almost everything from smartphones to home appliances. Because of some unusual circumstances, labor in China has become expensive. The cost has increased three-fold which has caused a lot of ruckuses and that is the reason the factories are moving out of China.
Foxconn, a Taiwanese company is moving its plants from China to India, while many of the home appliance companies are moving from China to elsewhere in Asia. It is looking grim for China as the companies are finding it hard to sustain. Panasonic moved its car air conditioner factories to Thailand and Malaysia. While Daikin also chose Thailand for the manufacturing of its home appliances.
China Household Electrical Appliance Association said that the companies are moving away from China and especially the home appliance companies are finding it hard to keep their feet on the Chinese soil. However, shifting a factory is not easy. The standard of the products shouldn’t fall and the standard depends on the workers working in the factory.
This is where the companies need to be careful as the quality of the products depends on the labor. The cost of the labor might be less in countries like Vietnam, India, Thailand or Malaysia but the quality of the workers is also that matters a lot. It will be interesting to see how the companies fare outside of China as the manufacturing hub is now losing its crown while India is winning the battle in a war between China and the US.