News: Despite President Trump’s Criticisms And Battle Over Global Supply Chains, Offshore Outsourcing Is Still Prevailing Because Of Its Economic Incentives

In a previous news article, it was clearly stated that there must be an irresistible incentive for U.S. companies that keep seeking global supply chain. According to a recent New York Times post, “the economic incentives to outsource have continued to prevail regardless of the U.S. President’s criticisms of global supply chains.”

So, there it is black and white – multinational corporations are finding massive cost savings by adopting offshore outsourcing. The president’s trade policy resulted in costly business transactions with global destinations, and especially China. It also made a business transaction with other nations uncertain.

Higher Wages in the United States is a Turnoff for Most Firms

But, despite all these discouraging factors, the higher wages in the United States is one of the major reasons most global businesses have paid deaf ears to operating only in the United States and not seek more rewarding partnership offshore.

While the trade war crossfire made firms to exit China, most of those firms switched to other low-cost offshore destinations such as Mexico and Vietnam. However, some companies insisted they cannot afford to let go of China since the country is a growth market.

One instance of firms that sought an outsourcing partnership in Vietnam after leaving China is La-Z-Boy, a furniture-making company. According to the report by a research firm known as Panjiva, this furniture firm took its production to Vietnam from China the previous year to avoid incurring heavy tariffs.

Indeed, the pandemic has been quite devastating and has actually prompted a more comprehensive review of the consequences that come with relying on global supply chains. But, even the home companies have been hit hard, compelling majority of these companies to reduce the number of employees in order to remain afloat.

Right now, most business executives cannot predict what will happen to demand for their brands and offers for the rest of 2020 and the coming years. The home environment itself is not also encouraging companies to make investments as huge as setting up factories in the United States.

Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams