I read two articles recently in two different publications that refined the concept of globalization. The Rise of Central Europe – Deep reserves of educated, ambitious, and affordable workers are driving the region (Business Week – December 12, 2005). The rise of nearshoring – Ex-communist Europe is grabbing a lucrative niche in the global outsourcing business (The Economist – December 3rd-9th 2005). First some data (Business Week):
Country |
Factory Worker |
Engineer |
Accountant |
Middle Manager |
Poland |
$3.07 |
$4.32 |
$4.03 |
$6.69 |
Czech Republic |
2.81 |
5.38 |
4.10 |
6.81 |
Bulgaria |
0.73 |
1.43 |
0.83 |
2.80 |
China |
0.80 |
3.50 |
3.20 |
4.42 |
India |
0.43 |
2.40 |
1.93 |
3.13 |
Germany |
18.80 |
38.90 |
26.40 |
40.40 |
Data: Compiled by Ariba Inc. using national sources
On the surface, one would assume that the price advantages offered by the China/ India competition would overwhelm any attempt by the East European countries to compete in an open market. After all, I occasionally tell of my personal experience while working for a large multi-national U.S. corporation in a fabrication facility in Brazil. The facility was manufacturing products that originated in a U.S. facility, subsequently were moved to Scotland, then to Brazil. The Brazilian facility eventually lost the business to a facility in India because the Brazilian factory workers were paid US$1 per hour and the Indian factory workers were paid US$0.25! How do you compete?? Proximity … leverage the fact that your are;