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Are You Leaving China Now?
It¡¯s Not As Easy As You Think
By Rosemary Coates- Management Consultant
Our work helping companies reshore manufacturing has increased significantly since the beginning of the trade wars, and now the pandemic. Reshoring is a hot topic in business, discussed in C-level staff meetings and Board meetings throughout America.
Reshoring often involves leaving China on a quest for finding another low-cost country or in re-patriating manufacturing to America. But extracting business from China, whether it is your wholly-owned foreign subsidiary (WOFE), a contract manufacturer, or a supplier, isn¡¯t as easy as you might think. There are a whole host of Chinese regulations, fees, and risks to consider.
I have written about this before, but lately, there seem to be a lot of companies making the same mistakes when trying to extract themselves from China.
Our work helping companies reshore manufacturing has increased significantly since the beginning of the trade wars, and now the pandemic. Reshoring is a hot topic in business, discussed in C-level staff meetings and Board meetings throughout America.
Reshoring often involves leaving China on a quest for finding another low-cost country or in repatriating manufacturing to America. But extracting business from China, whether it is your wholly-owned foreign subsidiary (WOFE), a contract manufacturer, or a supplier, isn¡¯t as easy as you might think.
There are a whole host of Chinese regulations, fees, and risks to consider. I have written about this before, but lately, there seem to be a lot of companies making the same mistakes when trying to extract themselves from China.
Your Supply Base If you are manufacturing in China, your supply base for raw materials and parts is most likely also in China. It is important to consider that when you are reshoring manufacturing, you will need to encourage your suppliers to reshore, too.
The other alternative is to rebuild your supply base in the U.S. We coach our clients that this process can take 12-18 months. Until then, you will have to import production parts and may have to pay the 301 China penalty tariffs on these imports.
IP Theft In Other Countries If you are looking to run away from IP theft problems in China, beware of what you are running toward. IP theft isn¡¯t an isolated problem just in China.
Many countries throughout the world have weak IP laws that won¡¯t protect you. Counterfeit products come from countries throughout Asia, the Middle East, and more recently Africa.
And if you haven¡¯t registered your own Trademark in China, take note. Many Chinese companies will register your trademark and then use it after you leave the country, and there isn¡¯t much you can do about it.
The manufacturing IP, tools, and molds you leave behind will likely be used to continue the manufacturing of your products when you leave. It¡¯s going to be very difficult, if not impossible,