Sports Shoe Case Study

China is one of the world's biggest manufacturing hubs and a top choice for companies from around the globe. China has over 30year’s experience in producing goods for Western markets and now represents a huge part of the global consumer market. Compared to many of its neighbouring countries, China does a better job at retaining its place in the low-end industry segment. To be honest, it's cheaper to manufacture in China. This was why Sport Shoe Inc. had decided to manufacture in Pacific Rim.

Reason

1 Lower Wages

One of the main reason Sport Shoes Inc. manufactured in China is because of low wages given to workers. China is home to approximately 1.35 billion people, which makes it the most populous country in the world. The law of supply and demand tells us that since the supply of workers is greater than the demand for low-wage workers, wages stay low. Moreover, the majority of Chinese were rural and lower-middle-class or poor and until the late 20th century when internal migration turned the country's rural-urban distribution upside-down. Immigrants to industrial cities are willing to work many shifts for low wages.

2 Higher output and quick turnover:

Some domestic factories in the U.S. are often limited in capacity and time, but this is never the case with their Chinese

Whatever you might think about the validity of these notions, the reality is that many consumers value domestically manufactured products, and are often willing to pay a premium for it. This is something to consider very strongly if the margins you would be making by manufacturing in China are marginal. Once all the shipping, travel, and translation costs are taken into account, consider also the fact that you might be able to sell your product at a higher price point with that coveted “Made in the U.S”