It is common knowledge that the world's largest manufacturer of goods used to be the United States. However, with time, most manufacturing jobs in the U.S. moved to the East, specifically China and Southeast Asia. China is the largest single producer of goods in the East. This role is made possible by there use of SEZ's, or Special Economic Zones. These Special Economic Zones are not bound by the constrictions of communism, and are open markets with free trade. One of these SEZ's is called Shenzhen. Shenzhen is located in South of Guandong Province, a province in the South of Mainland China, just a few miles away from Hong Kong. Shenzhen is home to companies such as Foxconn, which produce iPads, iPhones, laptops, motherboards, and other electronic equipment. These items need to be shipped to consumers in the United States.
UPS is there to meet that need. With its acquisition of TNT, UPS is positioning itself to become a major player in both the European and Chinese markets. Another step it is taking is moving its intra-Asian air hub from the Philippines to a compound located at the Shenzhen Airport in Shenzhen, China. This relocation will cost $180 million, but will shave a day off shipping times. More than half of UPS's intra-Asian volume originate from China, Taiwan, South Korea, and Japan, with most of it from Southeast China and Hong Kong. President of UPS international Dan Brutto explains “Given the growth in shipping along the southern rim of China, it now makes more sense to sort and dispatch this volume from a hub closer to our customers."
"The new Shenzhen hub will be approximately one million sq.ft, and initially, it will be able to process up to 18,000 pieces per hour." UPS has also invested millions of dollars in an international shipping facility at the Shanghai Airport in Pudong province. This means many jobs will be created in this area, and should bring a huge economic boost to the entire region.
http://www.ridgebrook-ventures.com/news/news/ups-moves-intra-asia-air-hub-from-philippines-to-china/
Interesting! Although China is one of the world's largest producer of various materials, their production may decrease in the coming years.
ReplyDeleteChina's mistreatment of it's people, specifically migrant workers from the various providences, is getting the attention of the media and activists throughout the world and they're doing what ever they can to put a stop to it.
With multiple protection laws being implemented, millions of Chinese workers will the right to better working conditions, therefore leaving companies with more expenses, therefore producing less product, leaving UPS with less customers.
Maybe, but the types of reforms that you are talking about, where production in China becomes wholly unprofitable are not likely to happen--the government won't let it happen. Also, members of the government have taken other steps to ensure that US companies will continue manufacturing in China. China holds massive reserves of precious metals, such as Lithium, Iridium, and Neodymium. All of these are essential materials needed in the production of electronic equipment. The Chinese government, despite their agreements to participate in free trade with their joining of the WTO in 2004, have made purchase of these elements 6 times cheaper for companies that have production facilities within Chinese borders. The government is sending a clear message: Come to China, and save money on raw materials. Until international institutions such as the WTO gain more influence, it is unlikely that China will acquiesce to the pleas of Western governments, and in particular President Obama.
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