Because those countries also have lower labor costs, so executives can report that they’re saving money on labor costs and their company’s stock will go up. More cynically, international operations require more management (to keep on top of shipping issues and deal with different government circumstances in the different countries where operations are going on), and the managers who make such decisions may approve of an outcome where more is spent on management and less on labor. Most of the research I’ve heard of suggests that it is not because such relocations are overall more profitable; that’s very rarely the case.
Because those countries also have lower labor costs, so executives can report that they’re saving money on labor costs and their company’s stock will go up. More cynically, international operations require more management (to keep on top of shipping issues and deal with different government circumstances in the different countries where operations are going on), and the managers who make such decisions may approve of an outcome where more is spent on management and less on labor. Most of the research I’ve heard of suggests that it is not because such relocations are overall more profitable; that’s very rarely the case.
Except that the products made in these countries are in fact cheaper.