When most people think of outsourcing, they imagine U.S. businesses sending work to far-flung places like India, Russia and parts of southeast Asia where the salaries and cost of doing business are so much lower than in the United States that it makes a tremendous amount of fiscal sense.
What people never picture, however, is the United States being on the receiving end of these transactions, and yet according to an article last week in the L.A. Times, this is exactly where many Chinese firms are relocating the labor.
How did this happen? The short story is that incentives and a weak dollar have spurred foreign investment on U.S. soil, while land, labor and business operating costs are soaring in China.
The longer story belongs to people like Liu Keli, who is investing $10 million in South Carolina to build a printing plate factory opening in fall 2008 and hiring 120 workers. The land in Spartanburg costs less than one-fourth of what it would in Dongguan, a city in southeast China where Keli runs three plants, and he won’t have to put up with frequent blackouts.
And though the salaries of $12 to $13 an hour are more than six times the $2 an hour he’d pay there, South Caroline will offer him a tax credit of $1,500 per employee to offset the costs.
“They don’t want to miss this opportunity to bottom-fish in the U.S.,” an economist told the LA Times.