Chinese Enterprises Are Facing The Threat Of US Manufacturing Backflow.

The US capital layout of the global manufacturing industry is said to have returned to the US in recent years, such as Boeing, began to cut other local jobs, and recruited manpower in the US, so did general electric. Even Master Lock, a manufacturing company, gradually cut production capacity in China and moved jobs back to the United States.

US Department of Commerce first quarter report shows that the United States

However, some scholars do not pay attention to it. The main reasons are two points.

One is that the labor cost gap between China and the United States is still very large. According to the exchange rate conversion, the labor cost of the United States is about 6 times that of China. This is a huge "gap". It is not easy for the manufacturing industry to return to the United States to "jump" this gap.

Another point is China.

We believe that the trend of US manufacturing decline is unmistakable. Although its reflux intensity has not yet reached a level worthy of attention, I believe this trend will continue to strengthen.

First of all, many people see a 6 fold difference in labor wages, but they do not consider that if the actual cost of labor in China rises at an average annual rate of about 15%, which is a reference to the growth rate of minimum wage and belongs to China's income doubling plan, this is a very high speed.

Secondly, China's inflation level has increased by more than 6%, while the United States is about 3.5%. The cost gap caused by inflation is also a must for US multinational companies. If inflation keeps 2.5% level, assuming that the price of labor in China is 15% higher than that of Americans, then the "cheap" cost of China will disappear completely before 2020.

If the pport cost of high p continents is included, the power of reflux will be more sufficient.

The manufacturing industry in the United States is mainly exported to the United States.

The high pport cost brought by high oil prices is a considerable expense.

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These are all "visible" explanations, and there is a "capital labor" pformation problem which few people have considered. This is a hidden explanation.

Taking Master Lock as an example, its production line in China is not the fastest production line. Because China's labor force is very cheap, it can combine the low capital density and low technology level with China's cheap labor force to achieve the best economic arrangement, which is equivalent to the combination of capital and labor in the Harold Doma model: low capital and high labor volume.

Now China's inflation is serious and labor prices are soaring, and the arrangement of higher labor volume will be challenged.

Master Lock chose to return to the US because of the MILWAUKEE production base in the United States.