A firm that has a manufacturing unit in China considers shifting production to Cambodia.Which of the following would be a possible reason for it to not shift the production base?
A)Lower wages for labor in Cambodia
B)Less skilled labor in Cambodia
C)Higher productivity in Cambodia
D)Rising labor costs in China
E)Higher transportation costs in China

Question

Quizplus · Accepted Answer

The possible reason for the firm to not shift production base to Cambodia would be less skilled labor in Cambodia. While Cambodia may have lower wages, higher productivity and rising labor costs in China may encourage the firm to shift production. However, if the labor force in Cambodia is not skilled enough for the manufacturing process, the firm may not be able to maintain quality standards and production efficiency, which could result in losses. Higher transportation costs in China may also encourage the firm to shift production to a location closer to the target market.

A Firm That Has a Manufacturing Unit in China Considers