Reshoring is an increasingly common trend, especially among companies that had opted for reshoring. relocation of part or all of its production towardsemerging countries. Also known by the name of backshoring, reshoring is therefore based on the return to the country of origin of previously relocated production processes.
Origin of reshoring
For a long time, large companies took advantage of the low wages or the scarce taxes and duties existing in developing countries, or with low production costs. To carry out a relocation of its production processes, both in the manufacture of goods and in the provision of services.
Subsequently, many of these companies have discovered that offshoring carries a series of disadvantages that considerably reduce the benefits that they were counting on obtaining when leaving their country of origin. This has caused reshoring to become an increasingly widespread trend.
Causes of reshoring
In recent times the differences in production costs have been reduced considerably. Between developed and emerging countries.
On the one hand, developing countries have improved their working conditions, ceasing to be the cheap labor that motivated relocation. On the other hand, the advancement of technology supposes an increasingly lower cost in human resources for the companies.
This has made it less and less profitable for many companies to move their production processes. Since this move involves a large investment and cost reduction was the main reason that motivated companies to carry out relocation.
Furthermore, offshoring entails a series of drawbacks that many companies had not taken into account, such as lack of quality, little protection for intellectual property, or lack of legal and political security.
All this has caused that over the years many companies that opted for offshoring relocate their production back to their country of origin.