High-Tech Companies move to China

From the last week we learned about globalization and forecast. With the development of economics and business, the world is becoming flat. Globalization can rational allocate resources and production facts in the world. It can promote the economic development of developing areas; reduce cost, conduct to the expansion of science and technology. However, globalization is not only an opportunity but also a challenge for every country. For those developing countries that have backward science and technology and low level of economics, the risks and challenges they faced will be even more severe. The deeply development of economic globalization and multinational companies brought significant force to the world trade and at the same time, brought many uncertainties and new features and conflicts.

 

The China’s entry into WTO has a huge influence in the global business. A decade ago, China had the lowest labor cost all over the world, companies from different areas rushed into China and built up their industries there to cut down the cost. As a result, majority of the products in the U.S.A are made in China now. That’s why when talking about China, many people think about words like cheap, low-labor-cost. Nevertheless, with the rapid economic growth and increasing cost of the row material, Chinese product is not the cheapest anymore and many high-tech companies move into China.

 

According to the article from the Wall Street Journal, in the past few years, Chinese labor cost has been increased continuously. John Menzer, CEO of Michaels Stores Inc. said the labor cost of the company has increased 15% to 20% last year. And the main problem this year is to find methods to cut down the cost such as decreasing the transportation cost. Even though, they still have to increase the price of some products. And many other companies forecasted that the increasing of the cost would not stop next year. I think under this circumstance, those companies will shift their industry to other countries which have a lower cost like Vietnam.

 

Although Chinese lost jobs since some companies withdrawing from China, many American companies set up their research-and-development labs in China. George Buckley, the CEO of 3M Co. said that since most of Americans are not interested in science, they expected to have more high-tech human recourses from Asia countries so that their products can meet the requirements of different consumers and governments.

 

China is not only providing low-cost and low-tech products but also attracts more and more high-tech companies. Americans are now losing high-tech jobs now. What do you think about American companies move their lab to China and elsewhere in Asia?

 

http://online.wsj.com/article/SB10001424052970204468004577167003809336394.html?KEYWORDS=National+Science+Board+3M+Co

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