Provide feedback in a min of 175 words, donot summaize.
One of the advantages of doing business with China would be that many companies have had business with Chinese manufacturers for many years, so they would have fostered good working relationships. Moving to a new location would require building professional relationships again. Additionally, according to the text, Global Business, China is still one of the top three economies generating FDI outflows, and the second economy receiving FDI inflows (Peng, 184-185).
China is also becoming more expensive to conduct international business with. According to the Business Insider article, The ‘Made in China’ story is falling apart, “labor costs about five times more in China than it did two decades ago and now costs even more than it does in Mexico” (Udland, 2015). China no longer provides the cheapest international manufacturing services. I personally see much more of an advantage, especially more recently, with companies doing business with Mexico versus China.
Mexico, on the other hand, is still more of an emerging market compared to other countries with a more established pattern of FDI inflow and outflow. Several auto makers are moving their manufacturing and production to Mexico. 64% of the vehicles produced in Mexico are exported to the United States (Peng, p.189).
One of the advantages of nearshoring is that the manufactured goods are created in neighboring countries, where shipment is faster, more convenient, and cheaper than internationally shipment. In the paper, Is China Always the Answer, author Jeremy Smith discusses how the costs of shipping good from China accounts for about ten percent of the cost of the shipped goods, whereas shipping from Mexico only accounts for about ten percent of the cost of the goods. The shipping costs to transfer goods from China to the United States is significantly higher because of the convenient location. In addition to the cost, the time that it takes to ship goods in significantly higher with China. This can be especially impactful in industries like tech, that are constantly changing with new products coming to the market. Additionally, Mexico provides incentives and tax savings compared to China.
Peng, Michael (2016), Global Business 4thed., ISBN 978-1-305-50089-1, Cengage Learning.
Smith, Jeremy. (2006) Is China Always the Answer.
Udland, Myles. (2015). Business Insider. The ‘Made in China’ story is falling apart. Retrieved on February 19, 2019 from https://www.businessinsider.com/cost-of-china-manufacturing-against-brazil-and-mexico-2015-12
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