China has built its reputation as the factory of the world, but is increasingly facing rising wages, forcing manufacturers including here in Britain to think hard about where they build factories, and even consider “reshoring”, or bringing manufacturing back home. Some companies, such as Rolls-Royce, Meggitt, Siemens and Nissan, are already increasing investment in the UK.
China losing its low-cost edge
According to the World Bank Group, 47% of China’s population are older than 40, up from 30% twenty years ago. This is expected to increase to 55% by 2030, meaning fewer young workers to man the factories. At the same time, labour is getting more expensive.
Average hourly manufacturing wages in China have trebled in the last decade to nearly $4 an hour, not far behind some countries in the EU. The gap with UK wages is still significant but it is shrinking. In short, it is becoming comparatively cheaper and efficient to manufacture in the UK. But something else is helping to cut costs for manufacturers – increasingly advanced and affordable automation equipment. [Read more…] about Why robots and digitalisation could trigger a reshoring revolution in the UK