AT A GLANCE
China’s overwhelming manufacturing cost advantage over the U.S. is shrinking fast.Within ﬁve years, a Boston Consulting Group analysis concludes, rising Chinesewages, higher U.S. productivity, a weaker dollar, and other factors will virtually closethe cost gap between the U.S. and China for many goods consumed in NorthAmerica.
LOOK AT TOTAL COSTS
Companies should undertake a rigorous, product-by-product analysis of their global supply networks that fully accounts for total costs, rather than just factory wages.For many products sold in North America, the U.S. will become a more attractive manufacturing option.
REASSESS YOUR CHINA STRATEGY
For many products that have a high labor content and are destined for Asianmarkets, manufacturing in China will remain the best choice because of technological leadership or economies of scale. But China should no longer be treated as thedefault option.
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