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Electronics Production | August 30, 2010

China loses cost advantages over other locations

Other global manufacturing locations are winning on rising salaries and wages in China, EMS-provider Flextronics states.
"As China moves up, up and up and up, for five straight years, it’s been moving up heading towards Mexican pricing. Mexico’s been the same labor cost for the past five years, it hasn’t moved up at all," said Mike McNamara, CEO of Singapore-based EMS-provider Flextronics, to Bloomberg.

However, moving production to inner China is not a viable option for Flextronics. 90% of its production is being exported, so moving away from ports and other logistic hubs is economically unsound. But, Mexico might get a bigger share of production in the future. "Mexico’s proximity to the U.S. is phenomenal. It’s going to put a little bit more emphasis toward doing more products in Mexico", Mr McNamara continued in the article.

Flextronics currently employs 200'000 staff worldwide; 45% are employed in China, 30% in American locations, 25% are spread across various other locations worldwide.

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