A Chinese manufacturer is moving part of his operations to the United States, because he says it will be less expensive that way.
Billionaire glass baron Cao Dewang told The Beijing News on Monday that the US was becoming a cheaper and better place for manufacturing because taxes in China were becoming too big of a burden, according to a report from SCMP.
Cao’s decision to invest $1 billion in the US, including taking over a former General Motors plant in Ohio (empty since 2008), flies in the face of conventional wisdom. Over the last few decades, millions of Americans have lost their jobs with factories fleeing overseas to places like China seeking lower cost of labor and less stringent regulations.
But, according to Cao, the 70-year-old chairman of Fuyao Glass which makes glass for some of the world’s top carmakers, manufacturing businesses in the mainland paid about 35% more in taxes than their counterparts in the US with value-added tax becoming the companies’ biggest burden. At the same time, cheap land, reasonable energy costs and other incentives mean that he can make more money by manufacturing glass in the US than by exporting made-in-China glass panes to the US market.
With this in mind, Cao warns that China is close to losing its traditional manufacturing advantage that has led to its historic economic resurgence over the last 35 years.
“I just told the truth and spoke out about the problems,” Cao said. “I just want to remind the government and businessmen and let everybody be aware of the risks, telling them to be careful.”
This will all likely come as quite the surprise for US President-elect Donald Trump. Both before and after the election, Trump bemoaned the not-a-fact that the US is the highest taxed nation in the world and that American companies are unable to make a profit due to excessive government regulations. He has promised to entice traditional manufacturing jobs back into the country by cutting taxes and regulations.
Of course, Trump could have just asked his daughter to learn that China is simply not the cheap manufacturing powerhouse it once was. Back in October, it was reported that a Chinese shoe manufacturer that supplies footwear for Ivanka Trump’s personal fashion collection was looking to pack up and move to Ethiopia to cut costs.
[Image via Sohu]