Outsourcing; China's Race to the Top

                                                  Outsourcing; China's Race to the Top

             The discussion of outsourcing has become a topic of significant dispute over the last few years.  Many argue that outsourcing is negatively affecting the U.S economy by giving their jobs to other countries for lower labor rates.  In 2011 alone, the United States outsourced 2,273,392 jobs overseas (Statistics Brain).   However, “plummeting technology costs and globalization of trade has made offshore outsourcing ubiquitous” (Tom Reilly, Outsourcing Opportunity).  Whether it’s a call with a customer service representative in the Philippines, the use of software developed in India, or the purchase of an iPhone manufactured in China, it’s all around us. It has become so common in corporate life we hardly notice it.  Nowadays, it’s not unusual to own numerous goods that read “Made in China.”  Furthermore, China has become one of the most dominant players in the economic realm.  Due to its large population, cheap labor costs, and experience, China is rising to the top of the outsourcing industry. 

            China, with the largest population in the world, once was home to the most advanced society, economy and sciences.  It declined however during the 19th and 20th century due to famines, foreign invasion, civil discord, and military failures. China's economy was revived during Deng Xiaoping's reign in China; he focused on a free, market-oriented economic development that dramatically changed the living standards of its citizens. This also led to its rapid industrialization, which made China one of the most important economies in the world. 

            With an enormous population of 1.3 billion people (Google Public Data), China has more inhabitants than any other country.  With such an astounding number of consumers, China has the potential to impact the biggest manufacturers and retailers in the world. In addition, the country’s market is growing rapidly; “China's current outsourcing market is growing an estimated 30 percent annually” (Sourcing Line).  On this rate, China will surpass India, the current dominant offshoring country, competing as the destination of choice for companies looking to outsource all parts of their operations. 

            In today’s global economy, attaining a competitive edge is vital.  According to Bryan Huang, president of BearingPoint Great China, an engineer costing $4,000 a month in the U.S would cost only $500 in China. And that’s for an engineer in Shanghai.  According to ChinaHr.com, the salary level of an engineer in places like Xian or Dalian is closer to $250 a month. In short, the cost can be said to be between a sixth to an eighth of what it would be in the U.S. This is the simple reason why U.S companies seek to outsource to China.   As businessmen, it is essential to take advantage of low rates, “ensuring that you are getting the best price possible for inventory” (All China Sourcing).  Due to these cheap labor rates, on top of a colossal population, it appears that China is becoming unstoppable in the race to the top of the outsourcing industry. 

           

  

                                                            Works Cited

"Advantages to Outsourcing in China." Web log post. Advantages to Outsourcing in China. All China Sourcing LTD, 3 Mar. 2010. Web. 28 Feb. 2013. .

Eltschinger, Cyrill. "China Rising." Forbes. Forbes Magazine, 29 Nov. 2007. Web. 28 Feb. 2013. .

Zhang, Jacqueline. "Outsourcing to China, Part 1." Sourcing Mag. CTQ Media, n.d. Web. 28 Feb. 2013. .

"Outsourcing in China." Sourcing Line. Sourcing Line, n.d. Web. 28 Feb. 2013. .

Reilly, Tom. "China Outsourcing." 'China Outsourcing' Next Horizon, 12 Apr. 2007. Web. 28 Feb. 2013. .