China has lost its position as the world’s lowest-cost components manufacturer to INDIA and MEXICO said a study by Alix Partners – business consultants.
This came as a major blow to the Asian giant while it fights the financial crisis.
USA has also reduced the gap to the degree that China’s total manufacturing costs are now only 6 per cent below those of American factories.
Gone are the days when companies could see cost savings of 30% or more by outsourcing decisions to China with eyes closed.
Alix Partners which specializes in helping distressed businesses compiled its Manufacturing-Outsourcing Cost Index by analyzing a basket of manufactured components and assembled parts, ranging from small motors to die castings.
It compared the cost of making the items in China, India, Brazil and Mexico versus the US, tracking changes over three years in factors such as labor, overheads, exchange rates, transportation, and raw material costs. The index showed major shifts in costs over the past six months that pushed China down the rankings and Mexico now on top.
Manufacturing accounts for more than 40 per cent of the economy in China, which has been hit hard by evaporating demand for its products in key export markets such as the United States and Europe.
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