The problem with Made in China

In the calculus of costs, risks, customers and logistics that goes into building global operations, an increasing number of firms are coming to the conclusion that China is not necessarily the best place to make things.

...reasons why China has not found itself at the top of the list for some new factories: “Rising costs and a natural desire by companies for diversification.”

...pay for factory workers has been rising at double-digit rates for several years. For managers, the situation is worse still.

[Some suggesting moving inland] where many costs are much lower than on China's heavily developed coastline [but for others] it is too expensive to get products to America and Europe from there. Other observers add that the shortage of management talent inland is even greater than on the coast. And it is not easy persuading expatriate workers to take their families to places like Chongqing and Chengdu, where foreign companions and international schools are thin on the ground. So many firms decide they would rather invest elsewhere in Asia...

China also has other risks, notably a lack of protection for intellectual property rights. Stories abound of foreign investors finding local companies churning out identical goods to their own, but under a different brand...

Managers also worry about the rising value of the Chinese currency. Although nobody expects sudden leaps, the yuan does appear to be on a steadily upward trajectory...