Outsourcing: Helping or Hurting?

Seeing a “Made in China” label on everyday objects is common occurrence, but few people stop to think about what impact offshoring has on China. There is more to the story than just cheap labor.  The offshoring and outsourcing of jobs from Western countries to China initially helped the country economically, but, overall, it has restricted the country from growing its domestic economy and has created more social problems in the workplace.

There is no doubt that the outsourcing and offshoring of jobs to China has allowed the economy to flourish. In fact, the economic downturn of the United State’s economy has only encouraged outsourcing. As a result of the offshoring of Western jobs, “Chinese businesses have won offshore outsourcing contracts with a value of $22.35 billion” (Zheng).  China is clearly profiting from the need of other countries to have products made quickly and inexpensively.  Although this economic view is true, there are other realities that are not quite as apparent. As seen by the huge amount of money that outsourcing brings into China’s economy, it is clear that manufacturing products for other international companies makes up a significant piece of the Chinese economy. The loss of this business would have devastating effects on the Chinese economy. Due to this reliance, China has been slower to develop “institutions that balance the needs of innovators inside the corporation against the needs of the investors outside the corporation” (Trefler 2). This lack of innovation and dependence on foreign countries to provide employment leaves “China…a long way from being [one of] the world’s innovation giants” (Trefler 3).  It can be inferred that China would have trouble developing and standing completely on its own without the jobs that are outsourced to it.

This potential problem has become more and more of a reality as the population of China changes. After experiencing a drop of 20-year-olds to 30-year-olds, “China can no longer attract manufacturing with the promise that an unending pool of rural migrants will keep its wages down” (Hornby 2). The prospect of an end to cheap labor could spell disaster for China’s economy.

The outsourcing of jobs to China has also caused social issues to arise. The abuse of workers and lack of regulations has caused unrest among workers. Samsung—who outsources jobs to China—is one of the companies being accused of unfair treatment of workers. This particular incident has resulted in over one hundred hours of forced overtime and unpaid work. Not only were they made to work extra, but the Chinese Samsung workers were “also subject to ‘verbal and physical abuse’” (Yang 1). This is only one example among many that have surfaced over the recent years.

When it comes down to it, it cannot be denied that outsourcing jobs has helped the Chinese economy to grow. More people are employed by companies such as Nike, Walmart; but, this has also led to more being exposed to abuse. Outsourcing has become such a large part of the Chinese economy that it has distracted the country from focusing more on its own industry and innovation that will be necessary in the long term.

Works Cited

Barboza, David. "Reform Stalls in Chinese Factories." The New York Times. The New York Times, 05 Jan. 2008. Web. 27 Feb. 2013.

Hornby, Lucy, and Don Durfee. "Chinese Skilled Workers Raising Their Own Pay By Switching Employers." The Huffington Post. TheHuffingtonPost.com, 25 Mar. 2012. Web. 27 Feb. 2013.

Raheja, Dalip. "Apple Needs to Find Its Exit Strategy From China." Businessweek. BLOOMBERG L.P., 26 Sept. 2012. Web. 28 Feb. 2013.

Trefler, Daniel. "Offshoring: Threats and Opportunities." The Offshoring of Services: Issues and Implications (2005): 1-63. University of California Berkeley, 12 May 2005. Web. 27 Feb. 2013.

Yang, Jun. "Samsung Abuses Workers at Its China Plants, Labor Group Says." Bloomberg. BLOOMBERG L.P., 5 Sept. 2012. Web. 27 Feb. 2013.

Yangpeng, Zheng. "Economic Downturn Benefits China's Service Outsourcing." China Daily. China Daily Information Co, 25 Sept. 2012. Web. 28 Feb. 2013.