China labor costs

The preliminary cost analysis was conducted with the help of Mr. Peter Chan of Chiaphua Industries Ltd. Table 12.8-2 compares the cost of subcontracting the manufacture of plastic and metal appliance components versus manufacturing in-house for a production volume of 1000 units per month. All calculated costs are below the US 100 limit. A cost saving of twenty percent was forecasted assuming that the facility will be built and operated in China where the land and labor costs are cheaper. 

China cheap labor and booming demand Labor costs in China can be just a tenth of those in the USA. Constructing plants is 20 to 50 percent cheaper, and plant operations enjoy a 30 to 40 percent fixed cost advantage over their US counterparts. Western companies find it hard to compete in the Chinese market, with a labor cost shortfall of more than USD 100 to 150/t of LLDPE, and shipping costs from Europe and the USA of USD 90 to 100/t. 

Downstream polymer production (except for derivatives of ethylene, which is difficult and expensive to transport) will generally be located in the home country where Asia-Pacific companies can capitalize on low labor costs while participating in China s strong GDP growth. 

Thanks to internationalization of business, most of the key players in the business of fiavors and fragrances know exactly where they should establish manufacturing facilities for the aroma chemicals. This will do doubt be dictated by the political scenario of a particular country, availability of reasonably trained and cheap labor cost, and most importantly the availability of the basic raw materials (natural and also synthetically made). Needless to emphasize that China and India—the two largest countries in the world—with more than 2 billion people will be two major... 

While in the USA environmental regulations were very strict and labor costs relatively high, Chinese companies profited from a combination of low labor costs and lax environmental regulations. Also, the largest rare earth mine in China at Bay an Obo not only produces rare earths but also iron ore, which provides another stream of income which covers the mine s fixed costs (Gholz 2014). 

The ceramics industry, like many others, can establish production facilities in which labor costs are lower. For example, KEMET Corporation based in Greenville, SC, a manufacturer of tantalum electrolytic and multilayer ceramic chip capacitors, is relocating all manufacturing to lower-cost facilities in Mexico and China. 

The polynosic rayons enjoyed a revival of fortimes in the 1990s when the new lyocell fiber produced by Courtaulds (Tencel )—a solvent spim fiber with polynosic properties— became popular in ladies apparel and denim. By 2001 however the Toyobo Tufcel plant in Japan had been closed and at the time of writing, it is likely to be transferred to China where lower labor costs would allow it to compete more effectively with lyocell (see below). 

With the rather sudden development of new applications for rare earth elements and lithium, questions of supply have become important. China has had a near monopoly on rare earth elements and, with the advancement of high-tech industries in China, which may consume available supply, other countries have become alarmed regarding availability. China is also a source of lithium, although Bolivia is the main supplier. Fortunately, rare earths are not very rare, and the vast U.S. deposit in Mountain Pass, California, was the largest supplier until the facility was closed because of competition from China where labor costs are very low. Now the mine is being modernized in preparation for production to resume. Rare earth deposits also occur in Canada and even Viemam. 

The diffusion of waterpower was initially slow— perhaps due to its relatively high capital costs, its geographical inflexibility, and the abundance of manual labor in both the classical Mediterranean world and m China. Only in the declining days of the Roman Empire, for example, did watermills become the standard means of grinding gram m some areas, displacing animal- and human-powered mills. 

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