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China reverses labour arbitrage trends, outsourcing textiles manufacturing to the USA

by Jeremy Coward

Outsourcing offshore to reap the benefits of labour arbitrage has been a common occurrence in the textiles manufacturing industry, with countries like China frequently seen as prime locations.

However, writes Quartz, “now it seems China is beginning to return the favour”. Chinese companies, in their search for cheap and convenient energy, raw materials and labour, are now opting for locations in North America.

For instance, Chinese textiles producer Keer Group has recently invested in a new 230,000-square foot spinning mill located in Indian Land, South Carolina. The state’s workforce, the close proximity to cotton producers and easy access to a port were all given as prime drivers behind this decision.

Thilo Hanneman – a researcher at Rhodium Group who monitors Chinese foreign investment – has commented that Keer Group’s activity is just one example of a recent spate of Chinese firms outsourcing production to the US, with 20 Chinese-owned manufacturers choosing the Carolinas alone as their most viable destination for outsourcing.

Manufacturing now accounts for one-third of all Chinese FDI to the US, with the number of Americans employed by Chinese-controlled companies approaching 90,000 and rising exponentially.

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Related: Donald Trump Vows to Prevent Offshore Outsourcing if made President

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