Comparison of manufacturing in Mexico versus China
It has taken companies about 10-15 years to finally understand what their actual landed costs are. Everyone knew that labor in China was cheaper than anywhere else in the world. This still is pretty close to being true. Vietnam and other areas are also coming up as lower cost than China. However, companies did not think through clearly what their move to China would do to their supply chain costs and delivery times.
The question of whether to manufacture in China versus Mexico first starts by looking at where your market or final destination of your finished goods will be. If it is in Asia or China, it makes sense to be in China. China is a huge and growing market and they should be in China making products for that market.
The question becomes if your market is in North America or Latin America, should you be making your product in China? If you just take the labor component, the monthly wages of a relatively unskilled assembly line or fabricator in China is approximately $350/month. In Mexico it is closer to $450-$475 for the same level of skill. There is a differential. What makes the difference is the number of hours an employee in China will work, versus the number of hours they work in Mexico. By law, the work week is 48 hours in Mexico. In China, the law is 40 hours, but it probably isn’t observed by companies. For the $350/month wage you hear of people working 60 or more hours per week.