ACME USA made/sold a widget for $10 each. China heavily subsidizes machines, utililities and manufacturing infrastructure to a local entrepreneur to make/sell a copies for $3 each. Quality is poor at first but they improve to $5 each
ACME now has serious competition, losing market share and is threatened by globalization. China approaches ACME to start manufacturing there, with an amazing offer on the table, including silencing the clones. There are strings attached. Shareholders are excited to accept.
ACME sets up a factory in mainland, making widgets for $7, paying $2 to China and a dollar to ship them back to the US to sell them for $10 each, as before.
ACME now has serious competition, losing market share and is threatened by globalization. China approaches ACME to start manufacturing there, with an amazing offer on the table, including silencing the clones. There are strings attached. Shareholders are excited to accept.
ACME sets up a factory in mainland, making widgets for $7, paying $2 to China and a dollar to ship them back to the US to sell them for $10 each, as before.
