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There have been several articles and blog posts recently that have reported the re-emergence of American manufacturing; some manufacturing is being brought back from China into the US. This process is known as “re-shoring”. Some of the reasons for this include the narrowing of US and China wage gaps, increased or misunderstood logistics cost, an emerging “buy American” sentiment as well as concerns about political issues in other countries.
A couple of recent and unrelated news items may highlight some of the political risks companies may see in off shoring to China. The first one is regarding Edward Snowden, the notorious leaker from NSA and the second one is about American CEO Chip Starnes who was held for 6 days in a China factory over a wage or severance pay dispute with Chinese laborers. Chip Starnes was released after some settlement has been reached.
The ongoing saga of Edward Snowden isn’t over. After he revealed he that he leaked information on the practice of NSA surveillance, he escaped to Hong Kong, where the Chinese politely ignored extradition requests from the US Government and subsequently let Snowden escape to Moscow, where the Russians are also (no so politely) ignoring US requests.
Both incidents should highlight a few issues with US manufacturing in China or other countries.
Granted neither of these incidents were indications of an adverse trend, local Chinese governments are usually very friendly to US businesses, but it does make one wonder if there any American businesses looking for “one more reason” to pull manufacturing out of China. The political issues between US and China could be a deciding factor.