Since China joined the world trade association nearly a decade ago, manufacturers in the United States have been the largest supporters of both outsourced manufacturing and plant relocation.
China has invested over a trillion dollars in U.S. debt, and its manufacturing success is directly tied to a vibrant North American economy and confident consumer spending. It’s not surprising that with the U.S. now acquiring over one-third of all export assets manufactured in China that the out growth is dual reliance.
When an American consumer seeks to buy a vacuum cleaner, they are no longer able find any that have been made in America in chain stores, as is the case with many products today. North American demand for used assets decreased as manufacturing plants in the United States closed and were sold off. At the same time, demand in Asia increased. The United States and China are now codependents, and this is an increasing trend around the world. This phenomenon is true across dozens of sectors, from necessities in the automotive industry, such as tire production, to convenient home appliances like the microwave.
As factors of outsourcing grow exponentially, the paradigm shift in selling used equipment is profound. Much has been written, both positive and negative, about the impact of U.S. manufacturing being outsourced to Asia. It is important to address the impact of outsourcing on domestic and global values and to create sales timelines for performing but redundant manufacturing assets in North America. China’s effect on sales and values is threefold. First, sales take longer. Second, marketing costs more. Third, many times asset brokerage and regional expertise are required.
Much has been written about the positive and negative impacts of the outsourcing of US manufacturing to Asia. Beyond that, we need to consider the impact of outsourcing on domestic and global values, sales timelines, and strategies for North American manufacturers that are performing but redundant. It is not surprising that the outgrowth of the US’s current acquisition of over one-third of all export assets manufactured in China is mutual reliance. China has invested over a trillion dollars in US debt, so its manufacturing success is directly tied to a vibrant North American economy and confident consumer spending. Likewise, since China joined the World Trade Organization nearly a decade ago, US manufacturers have outsourced manufacturing and relocated plants to China more than any other country. As these factors exponentially grow, the paradigm shift in selling used equipment is far more profound. When you go to an “All-American” store such as Wal-Mart to buy your vacuum cleaner, none of it is now made or assembled in the US. As each plant here has been sold off, North American demand for used assets decreased as Asian demand increased. This phenomenon is true across dozens of sectors. Clearly, the US and China are now in a state of co-dependency, and the strength of this dynamic will only increase.
Given this history and scenario, how does the China Factor affect sales and values? The answer: Three fold. First, sales take longer. Second, marketing costs more. Third, asset brokerage and regional expertise are often needed.
Heritage Global Partners
Asset Advisory and Auction Services
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