In the past, it was profitable to move production to foreign countries like China or Vietnam, because wages were a lot lower there. At the start of this millennium, many companies made the move, taking part in the offshoring trend. "Between 2000 and 2010 some 40 percent of the European companies made the shift, partly or completely", Rudy Aernoudt told the VRT's financial affairs programme "De Markt".
An estimated number of 3.5 million jobs were lost in Europe in the process, Aernoudt says. Now, a reverse trend is making headway, though it is still in its initial phase. "But the potential is big. In the U.S. 400 companies have returned, accounting for a total of 1.5 million jobs", says Aernoudt.
There are multiple reasons for the new trend:
- The low wages in China have risen substantially, making the wage gap much smaller. Wages in China have doubled in ten years' time. This is also the case in countries like Romania of Bulgaria.
- Transport costs have risen. "If you want to have a container shipper from Shanghai to Antwerp, it will be ten times more expensive than two years ago," experts say.
- The corona crisis was also an eye-opener: it turned out that Europe did not have the capacity to manufacture enough mouth masks at first. For many, it was a wake-up call: why manufacture items in China which we can also manufacture here? It would make us less dependent, at least.
Rudy Aernoudt has calculated that 56 percent of the companies would benefit from moving production back home.