From China To The West: Why Manufacturing Locates In Developed Countries

This article analyses the competitive priorities underlying manufacturing location initiatives in developed economies. Specifically, building on secondary data, we compare and contrast manufacturing backshoring from China by companies headquartered in developed economies (308 cases) and Chinese foreign direct investment to developed economies (155 cases). Results suggest that both types of initiatives share some common priorities, such as exploiting the 'country of origin' effect and innovation opportunities in developed countries. At the same time, results highlight differences that may be attributed to the home country of the firm. In particular, cost priorities appear to be more important for Chinese companies than for backshoring ones. Findings offer insight into why manufacturing in developed economies may expand as a result of both repatriations and of foreign direct investments from emerging economies such as China, and point to potential areas of policy intervention.