Relocation will be getting stronger with Sub Prime Crisis

Although the mortgage crisis and the resulting credit crunch in the United States do not directly affect Asian economies, rippling is felt every day. Most obviously, the cost of production is so different from one or two years ago. Another aggravating factor is the decline in demand that produces products in the world's largest marketplace, especially in E & E and in the car. Many vendors' relocation decisions have also changed; the decision to relocate to cheaper manufacturing countries, such as China, Russia and Vietnam, is gaining momentum as ever, as these companies will see their competitiveness is eroded when the entire market in the world has dragged on. To gain access and gain competitive advantage, companies try to find alternatives to improve cost-effectiveness, one way of moving them to low-cost countries.

Built and established strong domestic relationships are being abolished and as a consequence high employment increases. To avoid this, the government is starting to make plans, for example, it gives companies many projects. Though this is a short-term remedy, limited choices remain. Many of these countries, at the moment of the relocation of foreign companies, disclose their weaknesses and many inefficiencies; did not update their value chains to allow them to create their own ownership. That is why his fate is again in the hands of foreigners.

Not only developing countries are involved in these concerns, developed countries such as Germany and France are experiencing the same trend; foreign companies who have built their base suddenly wake up and realize that their competitiveness is eroded by the depreciating dollar and the stronger euro. As these companies produced and sold the US market in the Eurozone, collateral is tightened as costs rise. The wave of FDI now seems to like Eastern European countries, but it can become a tsunami if economic tectonics moves at current rates.

With any of the consequences, the biggest victims are small and medium-sized businesses, who are largely dependent on foreign companies in contractual and business matters. The stronger the links are, the greater the effect will be if the relocation has taken place. This is because they are the main employers in these countries. At this time urgently calls for the value chain to rise; improving the individual production capacity and making the knowledge more and more important. Many countries may appeal their high level of exports and reflect their production capacity, but they have to count on large imports to carry out this export; intermediate products are also very high. In this case, the value of the added value of the product must be of the utmost importance as the quantity exported by a country.

Source by sbobet