Manufacturing in China: cost advantage over UK plummets

Perhaps most interesting of all, there has been a cost explosion in many traditionally cheap emerging markets, helping the US and UK positions. A decade ago, the productivity-adjusted cost of making manufactured goods was around $4.35 (£2.60) an hour in China and $6.76 per hour in Russia. These figures took the fact that both wages as well as productivity were lower into account.
Today, the picture has dramatically changed. Productivity-adjusted wage costs are up by around 200pc in both emerging markets, following huge pay rises, taking them to $12.47 an hour in China and $21.90 in Russia. America’s are up by just 27pc to $22.32.
Sure, it’s still cheaper to employ people to make things in China – but the gap has narrowed dramatically. Once transport and energy costs are included, shipping times, political uncertainty and the hassle of doing business in China, the gap narrows further – and in some cases the US has now become cheaper. In the case of China, the overall cost advantage relative to the US has fallen from 14pc to 4pc.

Magnette wrote:Quite a few small firms are beginning to shift things back to the UK - Hornby is one of them with the Humbrol and Airfix brands. I would think the shift would be for small, low-value products; the costs involved in moving a car factory would be collossal.