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A factor that contributes to the costs of manufacturing an item is the labor cost. It includes wages and benefits given to workers along the supply chain.

As both China and Mexico are developing countries, a worker earns a much lower wage than that of a worker belonging to a developed economy. For instance, the average American earns three to four times the average wage of a Mexican with the same job; he also earns four to six times the average wage of a Chinese worker.

Hence, many companies which are labor-intensive, migrate to these countries to lower costs of production.

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9y ago
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12y ago

Because China exploits it's workforce slightly more than Western countries do!

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12y ago

The labor force is cheap

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9y ago

Low wages paid to workers.

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Q: Why is production cheaper in Mexico and china?
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