Journal Entry Week 4 - Essay Example

Running head: business Journal Entry Week 4 In their analysis, Sirkin, Zinser and Hohner highlight the shifting trend of business and manufacturing bases from China back to America. The United States, along with other countries, opted for China as the manufacturing hub due to its low cost labor, technological expertise and resources, as well as regulatory encouragement in support of such activities. However, after a few decades, challenges with China have increased to an extent that these challenges are putting considerable amount of pressure on such countries, mainly the United States.

Some of these challenges include increasing labor and manufacturing costs and logistics. Due to these challenges, shifting their manufacturing base back to the North America seems better option. The most obvious gains would be in the form of savings in labor costs compared to present Chinese trend; savings in transportation, duties, supply chain risks, industrial real estate and other such costs. Automation and other such measures to reduce costs will further depreciate Chinese labor economy.

Rising demand markets in the Asian and Chinese regions can be advantageous to the North American manufacturers. Considering the challenges posed by the Chinese labor market, shifting outsourcing base to other developing countries would be beneficial, but these countries lack required resources, skill, capacity, infrastructure, security, government support etc. The US adopted outsourcing culture many decades ago, which caused serious challenges for its citizens; yet, they emerged from these challenges only to be better innovators and, thus, rule the world.

During last decade, China dominated the world nations in exports and manufacturing industry owing to its low labor cost and availability of high-end technology. However, the author argues that manufacturing potential in the US still remains higher than visible and its flexibility adds greater potential to its future. Analysts suggest that the cost of production in the US is likely to be same as that in China, or slightly higher. In order to meet profitability from their production industry, China may shift some work to its interior cities that offer lower labor costs; however, differential skill set will be scarce.

Many evidences exist to believe about shift of production base from China and other countries back to America; however, large scale production still continues to be undertaken in China. Production competitors to China include other low-cost labor countries: Thailand, Vietnam, and Cambodia. Researchers vouch on Mexico as an ideal destination to supply North America because of its proximity, low-cost labor, and advantages from foreign direct investments through NAFTA; however, to reach China’s capacity and magnitude is a tough challenge for Mexico.

Despite these challenges and shifting paradigms, China would continue to remain a potential business and manufacturing hub serving rest of the world nations; hence, China’s potential cannot be underestimated or avoided by the developed nations. Organizations are forced to adopt innovative business and sourcing options, especially when partnering with large potentials like China. This analysis presents an insight into the changing trends of manufacturing grounds, and the looming transformation that nations need to be prepared for.

This article highlights that change is inevitable and that companies and countries have to be flexible enough to accommodate all requirements at national and international levels in order to survive and sustain their growth and hygiene. In short, it brings to surface potential unexpected changes which bring hope to one part of the world and, probably, nightmares to others. ReferenceSirkin, H.L., Zinser, M. & Hohner, D. (2011). Made in America, Again: Why Manufacturing Will Return to the US.

The Boston Consulting Group.