Offshore manufacturing involves relocating production processes to lower cost countries for export or import back to the home country to reduce costs and improve profits. Many large companies outsource manufacturing abroad, especially to Asia where labor is much cheaper. China has become a major destination due to its low production costs, large labor force, and tax incentives. Companies like Nike, Apple, IKEA, and clothing brands outsource the majority of their manufacturing to Asia, especially China, to take advantage of lower labor costs. This allows them to connect globally and increase profits.

1. Manufacturing in a country where labor and raw-materials are cheaper, for export or eventual import
intomanufacturer’shome countryis ‘OffshoreManufacturing’.Itisrelocationof manufacturing process
by a companyfromone countryto another. The economiclogicbehindthis istoreduce coststoimprove
corporate profitability. Here acompany evencan subcontract a business unit to a different company in
another country. Most of the big companies outsource their manufacturing process.
China & other Asian Countriesas Offshore Manufacturing Hub:
Chinahas emergedasa prominentdestinationforproductionoutsourcing.The marketsacrossAsian
countriespresentseveral benefits. Laboraspectisthe prime reason, inwhichcheaplaborcould costat
the fractionof the price it wouldcostdomesticallyinthe home country. Apartfromthis, there isan
aspectof expandingtheirbusinesstoChinaandotherAsiancountries.The world’smostpopulated
countriesopenupa tremendousopportunity tothem.Fromelectronics products,apparels,textiles to
furniture, everyproduct’smanufacturing processisbeingoutsource bybigcompaniesto Asian
countries.
In lessthana generation,Chinaevolvedfromascrappydevelopingnationintothe world’sfactory. A
strategyreserved forthe largestglobal playersofaddingmanufacturinginChina hasbecome the norm.
Chinahas attractedforeigndirectmanufacturinginvestmentata rate unprecedentedinhistory,driven
by itslowproductioncosts,a vastsupplyof labor, and preferential tax treatmentforforeigninvestors.

2. Nikehasmajorityof itsproduction farawayfrom itsheadquartersinBeaverton,Oregon.The majorityof
Nike’smanufacturingtakesplace indevelopingcountries. Nikewasoneof thefirst company to offshore
its manufacturing production. In1950, theyoffshoredtheirmanufacturingproductionof athleticshoes
inJapan, itwas bythe wayan immediate success.In1974 Nike leftJapanandwentto Koreaand
Thailandbecause the laborforce waslessexpensive.Inthe 80’sthe companyreachedone billiondollar
turnoveranddecidedtomove to ChinaandVietnamwhere theyare still settled.
Apple Inc, worldfamousforitsiphones,ipadand Mac computers, outsources 70% of its manufacturing
components. The majorcontract manufacturersof Apple are Foxconn,InventecandPegatron.All these
three companiesare Taiwan basedelectronicmanufacturingcompany.Theyall manufacture electronic
productsfor bigbrands. For Apple theyall operate fromChina.
IKEA is a multi-national home-furnishingcompany.Theyalso offshore it’smanufacturingtoAsia.
Earlierkeentofindasource of cheap laborIkeastartedoutsourcingpartof itsproductiontoa
manufacturerinPolandin1961. Since thenAsiahas suppliedanever-growingshare of itsproducts.
Chinahas overtakenPolandtobecome Ikea’stopsupplier,accountingfor18% of purchases.Inall 33%
of whatispromotedas "made inSwedenquality"comesfromAsia. Ikeacurrentlysources$370 million
worthof goodsfrom Indiaannually. Theyare evenplanningtodouble theirsourcesby2020.
In textilesmanyhuge brandslike TommyHilfiger,Inditex (thatownsZara), CalvinKlein,Disney,
Matalan, Mango and Walmartoffshore theirmanufacturingtoBangladeshandIndia. Walmartisthe
secondlargestbuyerfromBangladesh.ArvindMillsinIndiaoutsource forvarious international brands
such as Arrow, Lee,Wranglerand Tommy Hilfiger.

3. These companiesare connectinggloballywitheach-otherfortheirlargerreach andto earn highprofits.
We here at CrossProf.comhelpyouinthe same way.We connect youwiththe expertisegloballywho
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4. Ref:
http://www.civ.utoronto.ca/sect/coneng/tamer/Referneces/Industry/startegic%20outsourceing.pdf
https://web.stanford.edu/class/e297c/trade_environment/wheeling/hnike.html
http://www.counterpunch.org/2006/12/29/the-secrets-in-ikea-s-closet/
http://www.dnaindia.com/money/report-ikea-to-double-india-sourcing-by-2020-2053921
http://timesofindia.indiatimes.com/life-style/fashion/trends/Bangladeshs-factory-collapse-cause-of-
concern-for-India/articleshow/21051783.cms
http://articles.economictimes.indiatimes.com/2007-10-27/news/27675223_1_private-labels-sourcing-
base-textile-mills
http://www.hyundai.com/in/en/AboutUs/HyundaiMotorIndia/WhoWeAre/index.html
http://www.koreaherald.com/view.php?ud=20111030000315