Why does the US outsource?
Job outsourcing helps U.S. companies be more competitive in the global marketplace. It allows them to sell to foreign markets with overseas branches. They keep labor costs low by hiring in emerging markets with lower standards of living. If not, American consumers would be forced to pay higher prices.
How does China benefit from outsourcing?
By outsourcing to China you can reduce costs by between 30 and 80 percent depending on the labor intensity of the product. These outstanding rates will lower your cost of production exponentially.
What are the benefits of outsourcing in China?
Outsourcing in China carries a number of benefits that U.S. companies increasingly find attractive. It also retains one of the original benefits of outsourcing: lower costs.
Why does China exports so much?
First, China’s currency manipulation and other trade-distorting practices are a boon for its own exporting. Second, China’s suppression of labor rights make outsourcing more cost efficient for U.S. companies. The AFL-CIO estimates that repression of labor rights by the Chinese government lowered manufacturing wages between 47 and 86 percent.
How much does trade with China really cost the US?
Between 2001 and 2013, the U.S. goods trade deficit with China increased by $240.1 billion, or by $21.8 billion on average per year over that time period. And over the 2001-2011 period, U.S. workers who were directly displaced by trade with China lost a collective $37 billion in wages as a result of accepting other lower paying jobs.
Why do companies outsource their manufacturing?
Most companies outsource manufacturing, production, bookkeeping, and other non-core business processes to contractors for the ease of scaling up and down. For example, a western company outsourcing manufacturing to a Chinese manufacturer can reduce or increase its orders without any legal issues.