China incentivizes manufacturing to relocate to China with the allure of cheap labor and reduced capitalization costs. They provide infrastructure to lure companies to their shores and enter into profit sharing agreements with the target companies.
We should copy their model plus offerings ZERO corporate tax rates to any manufacturer that relocates from outside US bsck to US soil. The money saved by not paying corporate taxes would offset the labor cost difference. Reducing the burden of capitalization would further help offset the labor cost difference.
A company relocating would put paychecks on our streets and spur economic growth and increase tax revenues exponentially. As economic activity increases additional tax revenues will be created. All this combined with long term (40+year) profit sharing agreements could potentially provide the federal government a reasonable ROI on the cost to build manufacturing facilities and the infrastructure needed to support them.
China got it right and it cost the US its middle class which was once the bedrock of our economic strength and stability.
I began working in China in 1980. Our business involved sewing and related skills. Then went on to see all the growth of infrastructure (build eight lanes of highway, offramps, merge lanes, overpasses for 80KM in 18 months. How? Because there were few restrictions and zero resistance. Small villages just gone, a wake of factories, four square to a block, four stories, as far as you could see on either side of that freeway, for half an hour driving.
We quickly learned about culture, ethics, and customs, including how the government treated exporters. You could submit an invoice to the export group and get 15% in return. This meant a factory could build for cost and still be guaranteed a 15% gross profit. And don’t think the rest of the cost didn’t already include some margin as well. It was simple. And deadly competitive.
2005 was the last time to China deep inside. Seeing it change to that level it was never that shocking, not like i had a twenty five year space between visits. I was there on average four times a year for a week to ten days at a time. Sort of a slow boiling frog.
My experience with China over those twenty five years tended to seeing a system that was fine with doing what was asked or told, not one that created. But in the last twenty years I think that has changed. Now there is a huge pool of super educated and very smart young people there who feel the world is theirs to mold, and they are with architecture, design, and computer science that can be mind blowing.
Education is core here. Get that back on track and the rest can follow. Redefine learning and the value of skills and we can re-industrialize. Tools need people. It’s not about degrees or papers, it’s about the users.
Aloha
Stiks