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Offshoring is when a company moves its production from its home country to another country, where it can be done with cheaper labour, lower taxes, subsidized energy, and lower health-care cost. Offshoring is what people in the U.S. complain about when they complain about manufacturing jobs moving to China. Whereas India has emerged as a center of knowledge-industry outsourcing, China has emerged as a center of manufacturing off shoring. The cost of savings in moving manufacturing to China are so great that if one company begins moving its manufacturing to China, the only way for rival companies to survive is for them to also move their manufacturing to China.
The main reason that China is so attractive is that its workers are paid very little. This has caused companies in other developing countries to try to cut their wages to stay competitive, driving down wages for all unskilled workers in the developing world to stay competitive with “the China price.” Needless to say, the human costs of this process can be devastating. China sees its low-wage manufacturing jobs as a stepping stone to dominating all stages of production, especially design. As soon as China’s education system catches up with the U.S., expect to see wages of our highly skilled workers (lawyers, doctors, computer programmers) fall as they start to compete against international workers who will do the same job for less money. To stay competitive in the knowledge industry, the U.S. needs to put more of its resources into education and research.
Globalization is creating unprecedented uncertainties in the outlook for any career amidst increasing corporate access to a global labour market and the commoditization of intellectual property. Technical professionals are therefore forced to keep abreast of industrial trends in domestic and intellectual markets in terms of hot spots, where regions experience above-average economic activity and soft markets where supply of certain skills or resources exceeds demand. Silicon Valley Company should therefore respond by moving some of its stages of production to other countries where costs for these stages are a little bit lower hence will be able to lower its cost of production in the long run. I agree with Thomas’ ideas since he alludes that by moving their production overseas, U.S companies are able to sell the same items to consumers for less cost. He further cites that in 2004 Morgan Stanley estimated that offshoring to China had saved U.S consumers $600 billion since the mid- 1990s.
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