Red China BizWatch: Electronics Manufacturing
Today, 16% of electronics manufacturing occurs in developing countries. That percentage will double by 2005.
China gets about half of that production because its government offers highly subsidized financing and sometimes even provides facilities and equipment.
However, there are some limitations to the movement eastward.
1. Labor costs are rising in China, which reduces the benefits of moving production there.
2. The production of goods for the military isn’t being transferred there, for security reasons.
3. There are risks associated with weak intellectual property laws.
In response to these considerations, electronics companies are not shifting production of their most complicated products and cutting-edge technology to China to protect intellectual property.
And they are moving production out of coastal regions where labor costs are rising rapidly.
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