Many C-level executives are closing their China manufacturing-for-export operations. In the past 4 years alone, 100 MNCs have announced intentions to downsize or shutdown manufacturing in China.
Why? Because when a US-owned company makes products in China then exports them, they’re facing more and more headwinds:
✓ Annual increases in labor and production costs
✓ A more challenging regulatory environment for US operations in China
✓ Continuing US /China tariffs that are expected to increase
✓ Geopolitical tensions between China and US
However, the process of closing China operations can threaten a company’s ability to properly serve its customers. If the plan is not carefully thought-through and not properly implemented, a plant closure can stress a company’s operational stability, strain supplier relationships, and risk one’s brand reputation around the world.
Given China’s economy, many manufacturing facilities are downsizing or closing. As a result, concerned Chinese authorities are paying particular attention to the regulatory compliance of companies closing operations. Other dangers include:
- Work stoppages and extended strikes
- Violence to plant management and personnel
- Damage to plant and equipment
- IP and physical property theft
If carried out with thorough, highly detailed planning by a knowledgeable project team, executing the right plant closure plan will minimize the negative closure experience for all, and will produce lasting positive results for a company’s global operational stability, customer service, and financial performance.