Tuesday, March 8, 2011

How To Compete With Low Cost Country Manufactured Goods

Many  strategies can be employed  to compete with low cost countries manufactured goods with  first being to automate entire production thus increasing production many fold  and many more .

Labor rates in China, India and other developing countries are often 10 percent of the U.S. labor rate for the same skill and education.
Manufacturing costs consist of labor, capital (interest on borrowed money), energy, raw materials, real estate (rent), machinery and technology. The non labor costs are similar in all countries if the country's government doesn't subsidize its exporters.
The labor cost content of the total U.S. gross domestic product is about 50 percent. However, it varies from a few percent for industries like oil refining and chemical manufacturing where raw material and energy are the overwhelming costs to service industries where labor is about 80 percent of total cost. For example, assuming labor is 50 percent of your business's total cost, a competitor in a developing country paying 10 percent of the U.S. labor rate would have a 45 percent lower cost.

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