Globalism is all about utilizing the opportunities and efficiencies of an open market. Many industries became global over the last few decades by branching into Asia. The focus has been to utilize the inexpensive labor overseas to increase profit. In particular, China became the world’s factory by opening its gate to the outside world. Globalism has been moving forward in full speed so far however does it also have a reverse gear?
It appears that living expenses have been going up in China and therefore labor is not so cheap anymore. China’s labor costs will catch up with US within the next 4 to 5 years. Does this mean the golden age of globalism is coming to a halt?
As the cost gap of manufacturing offshore decreases, many large companies are considering bringing the manufacturing facilities back to US. An article in this month’s Fortune Magazine says, GE is investing $1 billion to its US factories and plans to bring all appliance manufacturing back to the US. Overall, this will definitely have a positive impact on US economy. Earlier this year, the Boston Consulting Group predicted that the US would gain 2 to 3 million jobs from higher exports in the coming years as production work shifts from China to US.