Will American Manufacturing Offshore Return? (Essay Sample)

Since the 1970’s China has made a conscious effort to institute policies and measures to attract foreign direct investment. Some of the measures include tax incentives to foreign companies that wish to invest in certain sectors of the Chinese economy. These measures attracted a lot of companies including US companies who wanted to move their manufacturing plants to a low-cost region. Companies consider low labor cost, skills level of local human resource and the trend of these factors in both the short and long term when making offshoring decision (Zhai et. al, 2016) While Zhai et. al (2016) recognizes low wage, return on FDI and access to local knowledge as a catalyst to offshoring, the researcher also highlighted some advantages of manufacturing in home country to include; maintaining competitive position, retaining manufacturing position, building skilled workers and expanded supplier base.
Reshoring is defined as returning manufacturing from a foreign location to where it was originally located (Gary et. al (2013) as cited by Whitfield (2017)). Reshoring is influenced by diminishing wage advantage, unintended strategic cost and future opportunities (Whitfield, 2017). The US government has instituted policies to bring back US companies that moved their manufacturing offshore. The policies are: technological progress policy, investment and financing policy, talent training policy, energy policy, market development policy and investment policy. The goal of the policy is to reduce the cost