| Offshore manufacturing is a business aspect where | | | | this again creates an extra incentive for those |
| an entrepreneur relocates or sets his/her | | | | workers who have lost jobs to work hard so as to |
| manufacturing plant in another country where | | | | scale the high value jobs which their country has a |
| conditions of manufacturing like labor and raw | | | | comparative advantage to produce. |
| materials are more cheaper or where the | | | | Similarly, offshore manufacturers incur expenses like |
| manufacturing environment is more favorable for | | | | shipping, inventory, communication, travel, training, |
| export and/or eventual import to the manufacturer's | | | | permits, duties, tariffs, compliance with import/export |
| home country. | | | | restrictions and others which they may not incur in their |
| The main reason for offshore manufacturing is to | | | | country. This in the long run pushes the production cost. |
| reduce production costs for a manufacturer who is | | | | Even more critical, other costs like training costs |
| trying to make more profits by exploiting the | | | | especially in countries where there is inadequate skilled |
| comparative advantages that exist in other countries | | | | manpower will force the manufacture to invest in staff |
| and which are not in his/her country. | | | | training and this will make offshore manufacturing |
| This aspect of manufacturing occurs in an environment | | | | unviable. Also because of competition and the |
| where there is free trade which is informed by the | | | | supposedly cheaper labor may make it harder for the |
| generally accepted fact that entrepreneurs should | | | | foreign investor to retain the workers he has invested |
| freely exercise the freedom to trade in products that | | | | heavily to train. This may result in a higher turnover of |
| cost them the least to produce. | | | | employees hence straining the operating finances. |
| Offshore manufacturing is beneficial to both the | | | | In most countries, especially in the developing nations, |
| manufacturer's country of origin and the host country | | | | there are some hidden costs that a foreign investor |
| for it provides employments opportunities, taxes and | | | | comes to find about once he has already established |
| other benefits for the host country. As for the | | | | his company. For instance, in Asia and Africa it is |
| company's origin country, it lowers the cost of goods | | | | commonplace for investors to bribe, give kickbacks or |
| and services because goods produced cheaply are | | | | even pay protection fee to facilitate services and |
| also sold at a competitively cheaper price. | | | | shield their investments. This normally pushes operating |
| In most cases companies are attracted to offshore | | | | costs up thus making offshore manufacturing unviable. |
| manufacturing because of the tax breaks offered by | | | | Offshore manufacturing can make better sense if the |
| the host. Also, some home countries do not levy taxes | | | | overseas company is located close to where they |
| on profits made from overseas manufacturing as long | | | | have a bigger percentage of the target market. For |
| as the profit does not come into the country. This is | | | | instance, Japanese automotive companies like the |
| the other intoxicating factor that makes many | | | | makers of the Toyota car are setting their |
| companies to invest overseas so as to avoid this | | | | manufacturing plant in America where they have a |
| taxation. | | | | huge market while they export other units home and |
| The flipside is that offshore manufacturing leads to job | | | | to the rest of the world. |
| losses in the manufacturer's country of origin, but then | | | | |