Bringing back 'Made in USA'

Updated: 2015-01-30 12:04

By Paul Welitzkin(China Daily USA)

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Outsourcing factors

Miller's Ferrise said outsourcing production involves many considerations. "I know that the Chinese New Year is coming up (Feb 19). That means the country will shut down for about a month. You need to build up inventory before that and then store it. It can get expensive."

Another factor that figures into the reshoring equation is the marketing appeal of the "Made in America" label. Can it become a marketing tool?

"It already is. Wal-Mart has pledged to purchase $50 billion of US-made products by 2022. It doesn't mean they won't buy Chinese-made products, but they will buy more US-made products," said Moser.

"We put Made in the USA on our products. We see it as a way to differentiate ourselves," Ferrise said. However he offers some cautionary advice to those who might think this will become a major driver of sales. "Made in the USA only matters if the price is the same as most consumers don't differentiate."

Assuming that reshoring is a trend that will persist, what does it mean for China's economy and for the bilateral relationship with the US?

Sirkin of the Boston Consulting Group doesn't think it will have much impact on China. "What we won't see because of reshoring are plants closing in China. As long as China maintains its growth rate of 6 or 7 percent, China will be able to absorb the loss of jobs to the US from reshoring and still manage to have a robust economy. If China's growth rate were to slow down below the target, then it might be a different story. But I don't see that happening."

Meredith Miller is the senior vice-president of trade, energy, and the economic affairs group at the National Bureau of Asian Research in Washington. She said China's leadership is working to grow the services sector and develop a more consumption-based economy.

"If successful, this effort will shrink the manufacturing sector's overall contribution to the economy. That said, China's manufacturing sector as a value added percentage of GDP (gross domestic product) is still fairly high and has hovered around 31 to 32 percent since 2005 according to the World Bank," she said in an e-mail to China Daily.

Wage increases

Miller said there are several factors behind the rise in wages in China including the government's effort to boost consumption, to improve living standards by increasing the minimum wage and to shift to higher income services jobs.

Miller said she doesn't expect reshoring to reach a stage where it affects diplomatic relations with China and in the long term may help the relationship.

"Estimates vary on how many of these new (manufacturing) jobs are the result of reshoring from China or elsewhere, but as US exports grow and the trade deficit between the US and China lessens, this could boost bilateral relations between the two countries. America's large trade deficit with China has fueled calls for the Obama administration and Congress to take action against what critics allege are unfair trade practices, such as China's fixed exchange-rate policy," she said.

Nick Vyas, professor at the University of Southern California's Marshall School of Business in Los Angeles, said in an e-mail to China Daily that because the US and Chinese economies have been interconnected for decades now, there will likely be a push toward collaboration in the growing technological aspect of the future of the manufacturing sector.

"A 'technology race' similar to the cold war arms race between the US and the Soviet Union could develop as the Chinese laborer slowly becomes replaced by robotics. However, I sense a trend towards collaboration and idea sharing. The US and China are major hubs for consumerism and while the US has led innovation over the past century, China's unique social and economic dynamics make it a breeding ground for possible large-scale innovation in the near future. A collaborative effort is in the best interest of the two powerhouses," he said.

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