China loses position as 'world's factory'

China was once dubbed the "world's factory"; however, the latest research shows that Mexico is the cheapest manufacturing destination, while China fell to third place following India.
Lower manufacturing cost in Mexico and India
Alix Partners, a global firm of senior business and consulting professionals, investigated the cost of manufacturing in China, India, Brazil and Mexico by comparing exchange rates, labor, shipping and raw material costs. Their report showed that in the past 6 months, Mexico beat China as the lowest-cost manufacturer due to a wide range of cost increases in China. A high level manager at Alix Partners was quoted as saying that gone are the days when companies could see cost savings of 30 per cent or more by making 'no-brainer' manufacturing-footprint and outsourcing decisions, to China in particular. 
India Economic Times said, "China has lost its position as the world's lowest-cost components manufacturer to India and Mexico," which was a "blow for the Asian giant as it fights the financial crisis." It predicted that "China's costs would improve in the second half of 2009, but it probably will not improve enough for China to overtake Mexico and India this year.”
India more popular
India was long considered good only for services, but since it has beaten China to become the second cheapest manufacturing destination after Mexico; it is now more popular with developers.
According to Deutsche Welle, a German company established two same scale subsidiary companies in Pune, India and Guangdong, China at the same time producing welding torches. Seven years later the responsible person of this program got a surprising result after comparing their performances: In India, not only the manufacturing cost is lower, but the quality is also better. He said, "The production has been increased to twice in India as compared with in China and products have reached very high quality standard. 90 per cent of the products made in India can enter international markets, while 90 per cent of the Chinese made products can only be sold in China."
A Hamburg entrepreneur also has experience of production in both India and China. He concluded, "80 per cent of the companies invested in India is satisfied, while in China at most only 20 per cent."
Poor quality of Chinese-made products is troubling
The low quality of Chinese products has always been a hot topic. Earlier this year US construction companies and consumers initiated a formal proceeding to investigate wallboards imported from China, which turned out to be toxic, posing potential serious health threats to homeowners. Recently, a congressional hearing into Chinese drywall took place. The EPA tested Chinese-made wallboard and discovered sulfur, strontium and two organic compounds associated with acrylic paint. Sulfur and the above mentioned two organic compounds were not found in American-made drywalls and the strontium is only 1/10 the concentration of that in their Chinese-made counterparts.
The U.S. Consumer Product Safety Commission ("CPSC") said that they have already received complaints of similar problems from residents in Washington, D.C. and 10 other states including Alabama, Mississippi, Louisiana, Virginia, Arizona and Ohio; while Florida far exceeded other states in number of complaints.
Similarly, the European Union said in April that almost half of all dangerous products it identified came from China in 2008. The EU Rapid Alert System for Non-Food Dangerous Products ("RAPEX") showed that of 1,866 dangerous products which were recorded in 2008, 59% of them were made in China.
With manufacturing becoming increasingly competitive, the importance of quality control of consumer products is becoming more apparent and timely. If Chinese made products are to compete in today’s marketplace, they will not only have to lower their prices, but they will have to ensure that their quality is excellent. This means that Chinese-made products still have a long way to go.