ROSEMONT, Ill.–Manufacturers of housewares should pay close attention to the benefits and challenges of manufacturing in China, according to author and business journalist Peter Navarro.
Speaking to the International Housewares Association’s annual Chief Housewares Executive SuperSession (CHESS) conference, Navarro, who wrote “The Coming China Wars” and who is a regular contributor to CNBC, said housewares vendors need to do a thorough risk analysis of manufacturing in China, including the cost benefits of manufacturing there. He said China’s cost advantages stem not so much from its cheap labor, as is the common perception, but from the fact that manufacturing in the China includes “network clustering,” in which whole cities produce single products or components, and thus create economies of scale.
Housewares executives should also study the issues that have emerged regarding manufacturing in China. These include counterfeiting and piracy, and a lack of health, safety and environmental regulations. The lack of government oversight is part of the nation’s cost advantages, but if China toughened its copyright laws and health, safety and environmental regulations, manufacturers could face significant cost increases.
“Conduct a proper risk assessment before you invest in China and all that is involved,” Navarro said, “and consider staying home if you are not 100 percent comfortable with going forward.”