A new survey finds boil worries with reference to product quality and intellectual-property theft. More U.S. companies are looking to Mexico and their own backyard

By Pete Engardio

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Two years of gloomy quality-control breakdowns, from vulgar fish and lead-tainted toys to poisoned drugs and dairy products, are taking their toll on China’s allure as a manufacturing platform. A novel think by supply-chain consulting fast AMR Research found that quality concerns are among the chief reasons U.S. manufacturers are scaling back plans to source more goods from China.

Instead, U.S. companies are looking harder at Mexico and other locales closer to closely when exploring at which place to put unaccustomed amplitude. The findings are based without ceasing a survey of 130 U.S. manufacturers, ranging from producers of drugs (BusinessWeek, 9/4/08) and computers to auto parts. The survey, completed in mid-October, found a sharp swing in attitudes toward China since May, when AMR conducted a similar study.

The reasons on this account that the shift suggest serious problems on the side of China’s export machine that go almost beyond the concerns over rebellion costs for wages, shipping, and materials that got a lot of attention earlier this year.

AMR asked U.S. manufacturers to rate different regions around the world (China and the U.S. were each counted similar to region unto themselves) on 15 different risks tied to sourcing products for sale in America. Just a few months since the biggest concerns over China were rising factory wages and the hike in trans-Pacific shipping costs owing to soaring combustibles prices. Since then, the 60% plunge in oil prices and a sharp falloff in U.S. imports from China have caused spot freight prices on ocean shipping to crash.

Now, the biggest concerns over China are quality and theft of intellectual property (BusinessWeek.com, 4/27/06). Half of respondents to the survey cited China in the same manner with the biggest source of "risk" for fruit humor failure. Fifty-seven percent rated China considered in the state of the biggest jeopard of intellectual-property infringement. Both categories represented sharp increases from May. No other region was named as the biggest source of risk in those two areas by more than 7% of respondents.