Why ‘Made in China’ Is Becoming ‘Made in Mexico’
The following article is a bit of the podcats Why ‘Made in China’ is becoming ‘Made in Mexico’ published by the new york times
From “The New York Times,” I’m Sabrina Tavernise, and this is “The Daily.”
The great supply-chain disruption caused by the pandemic is mostly over, but it’s led to a larger and more permanent change in the global economy. Today, my colleague, Peter Goodman, reports from the forefront of that change — an industrial park in Mexico, where companies from China are setting up shop.
It’s Tuesday, February 21.
Peter, we all remember that during the pandemic, we couldn’t get our stuff. Mattresses, couches were all stuck out at sea, taking forever to get to us. And as you explained to us on the show in October 2021, that was because the supply chain was totally disrupted, and specifically that the factories in China were totally disrupted, which really scrambled the entire shipping system across the Pacific that feeds everything that Americans want to buy. But now, you’ve reported that there’s been a big shift in all of this. So what was it?
So the last time we talked, we were talking about giant container vessels that were stuck floating off of large American ports for weeks, and sometimes even months, waiting their turn to pull up to the dock. That’s largely gone. At least, it is on the Big West Coast ports and Los Angeles and Long Beach. There are trucks moving and picking up containers. A lot of the shortages are gone.
Shipping prices, which had spiked dramatically, have plummeted and have returned, largely to pre-pandemic normal. But meanwhile, something really significant has shifted. The kind of globalization that we’ve all been accustomed to over decades has given way to something much more regional.
And what does that mean, Peter?
Well, for decades, China was at the center of globalization. Multinational companies went pouring into China. We talked about the “China price,” which was code for the cheapest-possible price.
This assumption that China — this country of 1.3, now 1.4 billion people — essentially has a limitless supply of workers eager for factory jobs, streaming in from the countryside, and that this was just an unbeatable combination along with investments into ports and other infrastructure by the government, and the buildup of the supply chain. You could get everything in China to make just about any product that you can imagine, from top to bottom.
But since the pandemic, multinational companies have come to revisit this central faith in China. I talked not that long ago to the CEO of Columbia Sportswear, this giant sportswear company that’s headquartered in Oregon, who said, for years, as we invested in Asia, we operated as if shipping was essentially free. Shipping was cheap. It was reliable.
And we don’t feel that way anymore, and now, we’re trying to figure out what comes next. And what comes next for many companies is figuring out how to make their products closer to their largest markets.
Listen to it complete: