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Stay or leave in China? Some U.S. companies continue to invest

| Jul 7, 2021 | Business Issues

Some global manufacturers have grown tired of steep Chinese tariffs, increased costs and pandemic-related fears, deciding to relocate their factory operations from the world’s most populous country to other Asian countries such as Malaysia, Vietnam as well as Japan.

Such developments are in addition to the continuing tensions between the U.S. and Chinese governments that have proven uncomfortable challenges for American companies that want to pursue business opportunities in China. However, some companies are bucking this trend and continue to make major investments in China, so can you.

Steady supply chains, growing domestic market

One example is Atlanta-based Kids2, the maker of infant and toddler toys and best known for its Baby Einstein brand of products. The company recently opened a $20 million factory in central China, lured by three of China’s top economic and business attributes:

  • Solid supply networks that provide nearly anything for a variety of industries
  • Competitive labor costs that make it attractive to companies, making it too good to pass up
  • Thriving domestic market with a growing middle-class market eager to spend

For many U.S. companies, moving out of China became realistic and a necessity in 2018 due to the rising tensions between the two countries, leading to a trade war and excessive tariffs. Calmer political relations were assured, but other promises were not quite fulfilled.

It turned out that some global companies that left China wound up returning, finding higher costs, labor shortages and difficulties connecting with suppliers in certain southeastern Asian countries.

There are so many matters to ponder and decisions to be made when considering working with China and opening a company or factory there. The business climate may not be the best now. However, just remember, things can only get better.