What is reshoring and how to avoid it?

Nov 23, 2022 | Nearshoring, Nearshoring in Latin America | 0 Comentarios

Avoid reshoring in your company and get the best production benefits!


If you still don’t know what reshoring is, this is your chance to recognize it and prevent it from reaching your company, unless you want it to.

Learn what it is and how to avoid it, as well as identify the factors that can cause it. Read on…


Reshoring is the process in which production is returned to its country of origin, after having failed in the practice of nearshoring. Nearshoring can also be used as a strategy to improve product marketing.


The purpose of nearshoring is generally to move a company’s production to a country that is closer or has better commercial advantages in the market.



Reshoring in China


Reshoring became forceful in China between 2018 and 2019. With the mandate of US President Donald Trump, who demanded to break all trade relations with the Asian country.

It was then that reashoring took place, mainly in industrial companies, with the withdrawal of US companies from China. Or also with the termination of contracts of US companies with Asian companies, which generated their productions.



What causes reshoring?


Some of the causes of reshoring have to do with changes in the countries where production is located, for example:


  1. Rising labor costs

The increase in labor costs is one of the main factors causing reshoring. Sometimes companies set up in a country because of low labor costs, but when prices rise and there are other places with better costs, companies decide to leave; reshoring.



  1. Currency exchange rate instability

Constant financial changes are a serious problem for companies setting up in another country. Most companies feel insecure about the future, so they decide to reshore and set up in another country or return to their country of origin.


  1. Rising transport prices

The price of fuel and transportation used to move production from the host country to the market where the product will be sold ends up costing more than generating production in the country of origin.


Reashoring is a practice you should avoid! And for that you need to have the best management of your remote operations. No matter if you decide to open a plant in Mexico or delegate production to companies in the country, the management of your operations is the key.



Do you want to know how to achieve it?


At Grupo Zeu we are a shelter company, in charge of introducing foreign companies and their operations to the Mexican market. From documentation, legal processes and even recruitment, we take care of everything you need!

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