Eastern European and Chinese Manufacturing Have Major Advantages

Both Eastern Europe and China have major manufacturing benefits that are difficult to be realized in Western Europe and the United States. Many companies are considering moving some or all of their operations to these locations in hopes of increasing profits and reducing expenses. Why do these two places attract companies?

1.) China and Eastern Europe are Two Different Markets: China is a low-cost manufacturing base for high volumes of products. They do not have the flexibility and the high level skill as people from places like the Czech Republic. Eastern European countries have tens of thousands of engineers graduating every year and are able to handle the retooling efforts of many businesses. However, China makes its money not on its flexibility and skill but on its low cost products. Therefore Eastern Europe is good for small orders and flexibility while China is good for high-output manufacturing with few changes.

2.) Low Cost Labor: Both China and Eastern Europe offer low cost labor not seen in Western Countries. In order for Western Countries to compete they would have to increase their productivity to a point almost unseen in most manufacturing plants. The goal is to increase productivity so that the cost of labor per product is comparable to that in either China or Eastern Europe. This is an extremely difficult endeavor as many of these countries don't have corporate medical, unemployment, discrimination, disability, etc. burdens.

3.) Government Help: Neither of these countries works on a "hands off" mentality. They have huge discounts, tax incentives and even government cash flowing to their industries. The governments of these countries give their businesses every support they can and are actively invested in making them strong. Therefore they are protected from competition, imports and economic collapse much more than Western companies. In addition, since the government pays for the medical care and other services related to workers companies don't need to deal with such issues.

The niche strategies, the government support and the low cost of labor make both China and Eastern European places ripe for foreign investors. These investors see the economies rising in the region and are drawn by future profitability. The American government hasn't done well in affording the same protections that are seen in these countries and the average citizen is beginning to feel the crunch. There is little import controls and even less tax breaks for American manufacturers. In order for the country to regain its feet it may need to use the strategies utilized by its competitors.