US push to bring factories home unlikely to hit China, experts say

High-end manufacturing may be starting to shift back from China to the United States, but China will remain a major manufacturing base for the foreseeable future, say industry players.

The US government would like to see American companies relocate manufacturing from nations such as China to the US and also encourage Chinese investments there, US Undersecretary of State Richard Hormats said in Hong Kong yesterday.

"We'd like to see companies that have invested abroad take another look at investing in the US," said Hormats.

In recent months, US local governments have been urging US investors with production bases in China to return to the US, said Stanley Lau Chin-ho, deputy chairman of the Federation of Hong Kong Industries.

"The US government is trying to tackle unemployment, so it is trying to convince manufacturers to return home," Lau said. "The local governments there are offering incentives for investments in manufacturing, such as tax breaks.

"The cost of production in China is rising. The government has tightened labour regulations. Everybody is expecting minimum wages to go higher. I can say many manufacturers will consider moving their production lines out of China to elsewhere in Asia and even to the US. [But] only a small number of manufacturers will move production to the US."

A Boston Consulting Group (BCG) report predicts that by around 2015, many products bought by US consumers will be able to be manufactured in the US as economically as in China.