Higher labour costs will eventually erode a country´s efficiency advantage when it comes to manufacture, specially a country that doesnt have a high technology base, or just leverage its position to get other countries companies to transfer their tech. China has the second largest economy in the world, but how many chinese brands do people in the west know, outside of smartphones/tablets/PC ?
Global supply chains jump from country to country, always following the cheap labour. Eventually it will happen to china too.
Dont be so sure about that.
I don't think so labor cost in not the only criteria for investment, comprehensive cluster of supply chain, skilled ,hard working labor, efficient transportation, automated and efficient harbor, port, airport, speedy custom clearance, political and economical stability. Huge and increasingly wealthy domestic market, educated population, no red tape, China has all those combination.
All of them goes into consideration, where people invest and park their money. Pot and pan, screw and assembled job, sewing and ironing job might leave. But Chinese factory will still supply the metal, the electronic component , mother board etc. so they go higher value added stuff and that is what they want as the population is better educated nobody want that job
I don't see anyone can replace Chinese supply chain in foreseeable future.
China largest FDI recipient in 2020 amidst global plunge -- UNCTAD report
GENEVA, Jan. 24 (Xinhua) --
Global foreign direct investment (FDI) plunged by 42 percent in 2020, a new report by the United Nations Conference on Trade and Development (UNCTAD) showed on Sunday, while China bucked the trend becoming the world's top recipient of investment flows.
In its latest Investment Trends Monitor, the Geneva-based UN trade and development body said that FDI fell sharply to an estimated 859 billion U.S. dollars last year, from 1.5 trillion U.S. dollars in 2019, and warned of further weakness this year, putting a sustainable recovery from COVID-19 pandemic at risk.
"FDI finished 2020 more than 30 percent below the trough after the global financial crisis in 2009 and back at a level last seen in the 1990s," the report wrote.
The data showed that the decline was concentrated in developed countries, where FDI flows fell by 69 percent to an estimated 229 billion U.S. dollars, the lowest level in 25 years.
Flows to Europe dried up completely, tumbling by two-thirds to minus 4 billion U.S. dollars, it noted. In Britain, FDI fell to zero, and declines were recorded in other major European recipients. A sharp decrease of 49 percent to 134 billion U.S. dollars was also recorded in the United States.
