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The Bus
05-07-08, 03:22 PM
Chinese firms bargain hunting in U.S.

<img src="http://www.latimes.com/media/photo/2008-05/38512660.jpg">

SOLD ON THE IDEA: Liu Keli, president of Shanxi Yuncheng Plate-Making Group, is building a factory in Spartanburg, S.C. He expects to offset some of the higher labor costs compared with China with a state payroll tax credit of $1,500 per employee.

<hr>

States are aggressively trying to lure companies looking to grow. Incentives and a weak dollar are spurring investment.

By Don Lee, Los Angeles Times Staff Writer
May 5, 2008

DONGGUAN, CHINA -- Liu Keli couldn't tell you much about South Carolina, not even where it is in the United States. It's as obscure to him as his home region, Shanxi province, is to most Americans.

But Liu is investing $10 million in the Palmetto State, building a printing-plate factory that will open this fall and hire 120 workers. His main aim is to tap the large American market, but when his finance staff penciled out the costs, he was stunned to learn how they compared with those in China.

Liu spent about $500,000 for seven acres in Spartanburg -- less than one-fourth what it would cost to buy the same amount of land in Dongguan, a city in southeast China where he runs three plants. U.S. electricity rates are about 75% lower, and in South Carolina, Liu doesn't have to put up with frequent blackouts.

About the only major thing that's more expensive in Spartanburg is labor. Liu is looking to offer $12 to $13 an hour there, versus about $2 an hour in Dongguan, not including room and board. But Liu expects to offset some of the higher labor costs with a payroll tax credit of $1,500 per employee from South Carolina.

"I was surprised," said the 63-year-old president of Shanxi Yuncheng Plate-Making Group. "The gap's not as large as I thought."

Liu is part of a growing wave of Chinese entrepreneurs expanding into the U.S. From Spartanburg to Los Angeles they are building factories, buying companies and investing in business and real estate.

<a href="http://www.latimes.com/news/nationworld/world/la-fi-chinainvest5-2008may05,0,2206623.story?page=1">[Continue Reading]</a>

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I think this is a good thing.

bhk
05-07-08, 03:52 PM
Despite the booga booga you hear from unions, outsourcing and the global marketplace has been a great thing for the US and the world.

Groucho
05-07-08, 03:53 PM
I voted "No" because I figured that's what infuriate <s>grundle</s> The Bus the most.

The Bus
05-07-08, 04:12 PM
I voted "No" because I figured that's what infuriate <s>grundle</s> The Bus the most.

:up:

GreenMonkey
05-07-08, 04:15 PM
MOD alert, mod alert. grundle has hacked someone else's account!

Baron Of Hell
05-07-08, 05:10 PM
Both. There are good and bad points in outsourcing jobs.

DVD Polizei
05-07-08, 08:37 PM
This sounds great, but assuming this is legit, it is certainly not the norm with outsourcing. I'm still a little confused on his decision to come over here. Taking into consideration healthcare and the obligatory worker's compensation costs, along with any accidents along the way (can we say insurance?) as this is a manufacturing facility.

Seems to be he'd be ahead of the game easily by staying in China, where rules and regulations are quite lenient when it comes to labor.

Second, investment in real estate, especially in China, you would think would increase in value due to China's ever-increasing expansion which has no end in sight at the moment. So, even if his company didn't make it, the land would be worth several times what he purchased it for.

Land in the US is rather risky at the moment, and is subject to a lot of new enivironmentally friendly legislation, not to mention the local communities who often place restrictions on the facility via their local representative creating an agreement of sorts with companies and the population.

So, as I said, I'm a little confused. Maybe someone can show me where he is making more in the long run. Maybe the Chinese Government taxes them more on profits?

orangecrush
05-08-08, 08:51 AM
This sounds great, but assuming this is legit, it is certainly not the norm with outsourcing. I'm still a little confused on his decision to come over here. Taking into consideration healthcare and the obligatory worker's compensation costs, along with any accidents along the way (can we say insurance?) as this is a manufacturing facility.

Seems to be he'd be ahead of the game easily by staying in China, where rules and regulations are quite lenient when it comes to labor.

Second, investment in real estate, especially in China, you would think would increase in value due to China's ever-increasing expansion which has no end in sight at the moment. So, even if his company didn't make it, the land would be worth several times what he purchased it for.

Land in the US is rather risky at the moment, and is subject to a lot of new enivironmentally friendly legislation, not to mention the local communities who often place restrictions on the facility via their local representative creating an agreement of sorts with companies and the population.

So, as I said, I'm a little confused. Maybe someone can show me where he is making more in the long run. Maybe the Chinese Government taxes them more on profits?
Well, I suspect the weak dollar helps with the increased "costs" here. Also, the blackouts may be a huge problem for his manufacturing process.

orangecrush
05-08-08, 08:52 AM
I voted yes because no is a false statement.

4KRG
05-08-08, 09:28 AM
I would need to see more details on the balance sheet of this deal to see why it is less expensive for this man to start a business in NC while 1000's of others see it the other way around.

What is missing from the puzzle?

Electricity costs that much in China? Isn't coal their # 1 source for power? The cheapest and most environmentally unfriendly source?

Land I guess I could see being a problem, but that is about the only thing.

wendersfan
05-08-08, 09:59 AM
While labour standards arguments have at times been invoked as a cover for protectionism, and this must be avoided, it is entirely appropriate that US policymakers seek to ensure that greater global integration does not become an excuse for eroding labour rights.http://blogs.ft.com/wolfforum/2008/05/a-strategy-to-promote-healthy-globalisation/

Seemed as good a place as any to toss in that quote. :shrug:

Birrman54
05-08-08, 01:19 PM
I would need to see more details on the balance sheet of this deal to see why it is less expensive for this man to start a business in NC while 1000's of others see it the other way around.

What is missing from the puzzle?

Electricity costs that much in China? Isn't coal their # 1 source for power? The cheapest and most environmentally unfriendly source?

Land I guess I could see being a problem, but that is about the only thing.

well, it seems to imply that land in SC was significantly cheaper than thee equivalent land in China. I'd also imagine that if he were constructing in areas of rural China, to ensure electrical access may require even more additional work. Power in the US may be more reliable as well.

I don't understand the people who act as if he's the only one who's 'insourcing', Honda and Toyota have been building plants in the south for several years now, while GM, Ford, etc flee the country as quickly as possible.

Tuan Jim
05-09-08, 05:24 AM
Being that the original businessman is still located in China, I don't think he's divulging all his "costs" to the writer of the article either. I wouldn't be surprised to hear that he's bypassing all sorts of "additional fees" and "regulatory payments" and other various "costs of doing business" back in China by exporting work here. While the upfront costs of business may seem fairly low in China, the actual ease of doing business and endemic corruption drive up actual costs -- and success makes a good target.

The Bus
05-09-08, 06:56 AM
I don't understand the people who act as if he's the only one who's 'insourcing', Honda and Toyota have been building plants in the south for several years now, while GM, Ford, etc flee the country as quickly as possible.

Al might be able to back me up on this but I think this was to do to for the companies to show their biggest single market (IIRC, I think Toyota sells more here than in Japan) that their products are "Made in America" and not just imported.

Just recently, one truck (Toyota?) had a big campaign about how it was made in Texas. That's still one area where Americans are fiercely loyal to Ford and GM eventhough Toyota makes pretty good trucks (at least the Hi-Lux).

maxfisher
05-09-08, 07:09 AM
If he's producing big, heavy components, I'm not surprised at all that it's cheaper to produce them here rather than produce them in China and ship them here. Metalworking shops/plants that implement new technology can go a long way towards eliminating labor as a factor. With new machines and a good automation system, you can have one guy doing the work that it would've taken 10 to accomplish a decade ago. Once you realize labor costs aren't the huge issue people thought they were, it makes sense to manufacture most items local to the markets where they'll be sold. There are exceptions to this, of course, with items like clothes and lightweight goods that have no real quality requirements.

Neil M.
05-09-08, 11:37 AM
Outsourcing has always been bad for this country. Some people are just too spoiled to realize it. And I'm speaking as a manufacturer.

orangecrush
05-09-08, 01:19 PM
Outsourcing has always been bad for this country. Some people are just too spoiled to realize it. And I'm speaking as a manufacturer.
Bad for the country as a whole or just for manufactuers?

Birrman54
05-09-08, 01:38 PM
Outsourcing has always been bad for this country. Some people are just too spoiled to realize it. And I'm speaking as a manufacturer.

lol. okay

4KRG
05-09-08, 02:05 PM
well, it seems to imply that land in SC was significantly cheaper than thee equivalent land in China.


CLEARLY the land is the deciding factor. Doing a little more research into this, it seems that land ownership in China *CAN* be questionable depending on who you are and maybe who you bribe, so this guy at least knows buying land in SC means that land will be his until he decides to sell it.


I'd also imagine that if he were constructing in areas of rural China, to ensure electrical access may require even more additional work. Power in the US may be more reliable as well.


Yes, but it is hard to place a cost on that based on the info in the article, that is all I was getting at. Does the power go down 2 hours a day at a production cost of $10,000 a day or does the power go out 2 hours a month at a production cost of $1000. It seems that plenty of other businesses are making it work in China...



I don't understand the people who act as if he's the only one who's 'insourcing', Honda and Toyota have been building plants in the south for several years now, while GM, Ford, etc flee the country as quickly as possible.

Cars are a different story

American car companies leave the US to escape the unions :)

eXcentris
05-09-08, 02:08 PM
Electricity costs that much in China? Isn't coal their # 1 source for power? The cheapest and most environmentally unfriendly source?



Coal prices have been skyrocketing.

http://www.canada.com/edmontonjournal/news/business/story.html?id=629c527d-016e-4941-8bdf-945d3a8f7d87

Neil M.
05-09-08, 03:49 PM
lol. okay

I think if you were living in the midwest, you wouldn't be laughing. But whatever, I'm not going to argue my opinion. I think outsourcing has lots of unintended consequences and I'm sticking with it. Plus, I don't like the idea of transfering the country's wealth to a communist nation.

The Bus
05-09-08, 05:58 PM
Plus, I don't like the idea of transfering the country's wealth to a communist nation.

I like how you define "the nation's wealth" as sneaker factories. Yes, this country really lost sight of its bearings once we let young Malaysian kids sew sneakers. That could've been <i>our</i> kids.

But whatever, I'm not going to argue my opinion.

Good. :)

bhk
05-10-08, 06:44 PM
http://abcnews.go.com/Video/playerIndex?id=1674437

Interesting story on India and outsourcing. It is a net plus for the US.

cinten
05-10-08, 07:49 PM
http://abcnews.go.com/Video/playerIndex?id=1674437



Biased liberal media filling it's viewers heads with propaganda and lies.

Th0r S1mpson
05-10-08, 07:54 PM
Biased liberal media filling it's viewers heads with propaganda and lies.
I'm sorry... your point again?

BKenn01
05-10-08, 11:21 PM
The whole outsourcing thing is overblown. I think Companies do it for 2 main reasons. To fill hard to hire for service jobs and get rid of union labor.

It will eventually cycle back because customers get tired of the language barrier for customer service postions and shipping cost will negate any other savings. The only good thing for the companies is they may get rid of the Union.

bhk
05-11-08, 11:10 AM
I'm sorry... your point again?

It's fun to have a personal groupie. You should try it sometime.


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