STUDIA NAD BEZPIECZEŃSTWEM

Nr 9 s. 41–54 2024

ISSN 2543–7321

Uniwersytet Pomorski w Słupsku

Przyjęto: 7.12.2024

Zaakceptowano: 7.12.2024

Oryginalna praca badawcza DOI: 10.34858/SNB.9.2024.003

Waldemar Pierzchlewski



e-mail: waldemar.pierzchlewski@wab.edu.pl

ORCID: 0009-0004-6476-4840

Halina Węgrzyn



e-mail: halina.wegrzyn@wab.edu.pl



PERSPECTIVES ON NEARSHORING INDUSTRIAL

PRODUCTION FROM CHINA. DIRECTION AND

CHALLENGES IN THE CONTEXT OF LOCAL BUSINESS

NEEDS

PERSPEKTYWY NEARSHORINGU PRODUKCJI

PRZEMYSŁOWEJ Z CHIN. KIERUNEK I WYZWANIA

W KONTEKŚCIE POTRZEB LOKALNYCH

PRZEDSIĘBIORCÓW

Abstract: 

primarily due to globalization and technological development. One of the key elements

of this change has been the role of China as the “world’s factory,” which has contributed



labour costs in China, changing geopolitical conditions and the push for sustainable

development, we are observing a gradual increase in interest in nearshoring. This article

aims to explore the prospects of nearshoring industrial production from China, focusing

on the directions of this shift and the challenges it faces.

Waldemar Pierzchlewski, Halina Węgrzyn

Zarys treści:        -

-





         -

        -

        -



ona stwarza.

Keywords: nearshoring, industrial production, labour costs, environmental regulations,

supply chain, investment risk.

Słowa kluczowe: -



Introduction

-

-



nearshoring, meaning relocating production closer to target markets. Several

factors contribute to this shift, including rising production costs in China, the

    

footprint.

1. Directions of change

1.1. Increasing production costs in China

          

to a considerable rise in labour costs, narrowing the production cost gap be-

tween China and developed countries. This phenomenon, combined with stricter

environmental regulations and rising raw material costs, has resulted in higher

Perspectives on Nearshoring Industrial Production from China…

operational costs for companies operating in China. Additionally, growing en-

vironmental awareness and pressure to reduce CO

emissions are prompting

businesses to reorganise their supply chains to minimise their carbon footprint,

including relocating production closer to consumer markets, which can also re-

duce emissions related to transportation. The rise in labour costs in China is

-

cations and growing competition for skilled labour. This phenomenon has been

widely discussed in economic literature, which points out that China is losing

its position as a “global factory” with low production costs.

1.2. Tightening environmental regulations

The tightening of environmental regulations in China is a key factor af-

fecting production activities in the country. In response to growing concerns

about climate change and environmental pollution, the Chinese government

has introduced a series of measures aimed at reducing the industrial sector’s

environmental impact. These include restrictions on emissions, as well as re-



environment, such measures can lead to higher production costs for businesses.

Recycling requirements compel companies to invest in appropriate tech-

nologies and processing systems, which can be costly but may also contrib-

ute to improving the company’s image as an environmentally responsible pro-

ducer. On the other hand, energy consumption restrictions drive businesses

         

which, despite initial expenditures, can lead to savings in the long term. The

introduction of these regulations aligns with the global trend towards increas-

ing environmental responsibility in production. Companies that adapt to these

new requirements can not only reduce their negative environmental impact but

also improve their competitiveness in international markets, which increasing-

ly prioritise sustainable development.

1.3. Rising raw material costs

The global increase in demand for raw materials, rising energy prices and

restricted access to certain key materials have also contributed to the rising



Waldemar Pierzchlewski, Halina Węgrzyn



 



1.4. The need for greater supply chain exibility





resulting from the pandemic forced companies to rethink their strategies and

often focus production closer to target markets through nearshoring. These de-

cisions were motivated by the need for quicker responses to changing market

conditions and the desire to reduce the risk of future disruptions. As part of

their adaptation, companies are investing in new technologies and automation

    -

talisation and advanced analytics have become crucial for improving supply



where most companies have invested in new digital technologies to better man-

age their supply chains.







conducted by the Federal Reserve Bank of St. Louis found that sectors such as

automotive, coke and petroleum, and basic metals were particularly vulnerable





In summary, the pandemic exposed the vulnerabilities of complex global

supply chains and demonstrated the importance of increasing their resilience

-

ogies. Companies that adapt to these changes will be better prepared for future

challenges and potential disruptions.

        How COVID-19 is reshaping sup-

ply chains    



A.M. Santacreu, J. LaBelle, Supply Chain Disruptions and Ination During COVID-19,







Perspectives on Nearshoring Industrial Production from China…

1.5. Changes in trade regulations

-

cess, which is gaining popularity as a strategy allowing companies to relocate part

of their production or services to neighbouring countries. However, nearshoring

-



-

strictions, as well as more subtle forms of barriers, such as stringent quality stan-

dards and sanitary regulations.

       



which aim to increase the costs of foreign products, making them less competitive in



and subtle, may include various regulations and standards that are not necessarily

formulated with protectionism in mind but can impede international trade through

technical, sanitary, or phytosanitary requirements.

Companies planning nearshoring strategies must therefore continuously monitor

changes in trade regulations, which requires not only ongoing legal analysis but

also strategic planning and potential operational adaptation. In this context, it is

crucial to both understand the current regulations and anticipate potential changes

in the trade policies of the countries with which the company collaborates or plans

to collaborate. This approach allows businesses not only to minimize the risks asso-





2. Human resource management

Relocating production or service activities to countries geographically clos-

er to key markets, known as nearshoring, is gaining popularity as a strategy that



brings with it challenges related to human resource management (HRM), which are

crucial for the success of such relocations.



retraining existing employees and attracting new talent in the new locations. It is

essential that HR strategies are integrated with the overall corporate strategy and



Waldemar Pierzchlewski, Halina Węgrzyn



Lengnick-Hall et al. achieving both vertical and horizontal alignment between HR

policies and the strategic goals of the organization is key.



Research shows that the COVID-19 pandemic accelerated changes in human

resource management, forcing companies to adapt to remote management and

the digitization of HR processes. Hamouche points out that the crisis also created

new opportunities for organisations to rethink and adjust their HR practices in re-

sponse to changing conditions.



Moreover, strategic human resource management (SHRM) plays a vital role in

building a sustainable competitive advantage by developing human capital and en-



-

ployee engagement, which are essential for the success of nearshoring strategies.



As Brewster notes, international human resource management requires an under-

standing of local practices and legal frameworks, which is critical when relocating



strategies such as creating international teams, which can better adapt HR practices

to local conditions while maintaining consistency with the company’s global stan-

dards.

According to Farndale, talent management in new locations often requires hiring



of the local market and culture. Hiring local employees can also contribute to better

integration of the company into the local business environment, which is crucial for

the long-term success of nearshoring operations.





   Implementation of Strategic Human Resource Management Practices:

A Review of the National Scientic Production and New Research Directions, “Revista de





S. Hamouche, Human Resource Management and the COVID-19 Crisis: Implications,

Challenges, Opportunities, and Future Organizational Directions, “Journal of Manage-

       





H.H. Hamadamin, T. Atan, The Impact of Strategic Human Resource Management Prac-

tices on Competitive Advantage Sustainability: The Mediation of Human Capital Devel-

opment and Employee Commitment



   The Eects of Market Economy

and Foreign MNE Subsidiaries on the Convergence and Divergence of HRM, “Journal of

International Business Studies” 2017, vol. 48, p. 48.

Perspectives on Nearshoring Industrial Production from China…

In summary, human resource management in the context of nearshoring requires

not only adapting HR strategies to new conditions but also investing in human

capital development and building employee engagement. It is essential that this

-

jectives of the organization.

3. Changes in consumer expectations

Shifting production closer to consumers not only shortens supply chains but

also helps reduce carbon emissions associated with long-distance transportation.

For example, reducing transportation distances can lower a company’s carbon foot-

print, which is increasingly valued by environmentally conscious consumers.

At the same time, nearshoring allows companies to better tailor their products



product appeal and customer satisfaction. In the context of global climate change

and the pressure for sustainable development, companies can gain a strategic advan-

tage by implementing sustainable practices in both the production and distribution

of their products.

Market and technological analyses play a key role in adapting supply chains

to changing consumer expectations, especially regarding sustainability. According

to the OLI (Ownership, Location, Internalization)



theoretical framework, loca-

tion analysis of production considers various factors such as labour costs, access

to raw materials and environmental issues, all of which are crucial when making

decisions about nearshoring.



Changes in location strategies, which involve shortening supply chains and

increasing their transparency, are increasingly a response to growing consum-

           

         

The OLI framework helps explain why and how companies internationalise, and it is



         Drivers and Barriers to Resho-

ring: A Literature Review on Oshoring in Reverse, “European Business Review” 2017,

Manufacturing Relocation of Plants to and from

Sweden – Extent, Characteristics and Performance, “Journal of Manufacturing Technolo-





Waldemar Pierzchlewski, Halina Węgrzyn

increasingly incorporating not only economic but also social and environmental

factors into their strategies.

Additionally, an integrated approach to supply chain management, which takes

into account changes in technologies and production practices, allows companies



This approach is essential for maintaining competitiveness and ecological responsi-

bility in an increasingly globalized world.

By shortening supply chains through nearshoring, companies can gain better con-

trol over production processes and enhance their ability to quickly adapt to chang-

ing market conditions and environmental regulations. Moreover, bringing produc-

tion closer to consumers can enhance the perceived value of brands, as consumers

increasingly favour products from more ethical and environmentally responsible

sources.

However, managing the transition to a nearshoring model requires companies

to conduct thorough market analysis, risk assessment and investments in new tech-

-

cations. Companies must also consider local conditions, such as access to a skilled

workforce, environmental regulations and operational costs, which are critical to the

success of nearshoring strategies.

For companies interested in further exploring the topic, it is worth reviewing

academic papers and industry analyses available through databases such as Emer-

ald Insight, where detailed information on the impact of nearshoring strategies on

supply chains and production management practices in the context of global crises

and market changes can be found.

4. Investment and infrastructure costs

The decision to relocate production from distant countries such as China entails

-

tion processes.

Investment costs: Building or upgrading production facilities in new locations

requires substantial capital investment. These investments are not limited to physi-

cal infrastructure but also include advanced manufacturing technologies necessary

to maintain market competitiveness. As Smith notes, these costs can be consider-



Perspectives on Nearshoring Industrial Production from China…

Time and technical expertise: The relocation process is also time-consuming.

Companies must conduct thorough market research to identify the best location in

terms of market access, availability of raw materials and skilled labour. Addition-

ally, as the literature suggests, deep technical knowledge is needed to ensure that

new facilities comply with the latest technological and environmental standards.





Risk and uncertainty management: Moving production also requires manag-

ing risks related to capital investments in an unstable economic environment. Com-

panies must be prepared for market volatility and potential regulatory hurdles that









new infrastructure and the adaptation of production processes, involving not only

capital but also time and advanced technical expertise.



This process involves comprehensive market and technological analyses, which



theoretical frameworks such as OLI (Ownership, Location, Internalization) al-

low companies to assess the advantages of ownership, location and internalisation,





Shifts in production trends are often driven by various OLI factors. These include

costs, access to resources, innovation, proximity to customers and suppliers, and

many other strategic considerations. Recent studies show that the dynamic glob-

    

companies’ decisions regarding production relocation, contributing to an increase in



In conclusion, managing investment and infrastructure costs in the context of

nearshoring requires a complex approach that considers both short-term cost ben-



aspects can enhance a company’s competitiveness in the global market.

J. Smith, Challenges and Opportunities in Nearshoring-



Ibidem.

Waldemar Pierzchlewski, Halina Węgrzyn

4.1. Adapting to new markets

Adapting to new markets in the context of nearshoring is a complex process that

requires companies to understand and respond to new regulatory, cultural and mar-

ket conditions. Moving production activities to countries closer to target markets

presents several challenges but also opens up new opportunities for growth and

operational optimization.

Regulatory conditions: Adapting to local regulations is crucial to ensure oper-

ational compliance and avoid potential sanctions. Companies must stay updated on

local regulations regarding production, employment, environmental protection and



emission regulations may require technolog-

ical or operational changes in production processes to meet stricter environmental

standards.

Cultural dierences: Understanding local culture and social norms is essen-



with customers and business partners. Business practices, such as negotiations, deci-



companies must adapt their management and marketing strategies to meet local

expectations and customs.



Trade barriers and consumer expectations-





-





In the context of nearshoring, companies must conduct in-depth market research

-

-

ration with target markets.

4.2. Risk and uncertainty



uncertainties that companies must consider when making such a decision. These

G. Hofstede, Culture’s Consequences: Comparing Values, Behaviors, Institutions and Or-

ganizations Across Nations

 The Competitive Advantage of Nations



Perspectives on Nearshoring Industrial Production from China…

risks and uncertainties can arise from various factors, such as changing economic,

-

ity of foreign operations.

Economic conditions

-







Political risk: Changes in local or international policies, such as new trade regu-

-

cludes potential shifts in political stability, which may impact the security of invest-

ments and personnel.



Environmental challenges: Environmental regulations can vary from country

to country and may require substantial investments in environmentally friendly

technologies or changes to production processes to meet local standards. Addition-

ally, natural disasters or other environmental crises can disrupt supply chains and

production.



Unforeseen expenses: The costs associated with establishing operations in

a new location may be higher than anticipated, including initial capital investments



or technological adaptation can also generate additional expenses.



To manage risk, companies can employ various strategies such as currency hedg-

-

-

quires continuous monitoring of both external and internal conditions to respond

quickly to changing circumstances.



 The Institutional Environment for Multinational Investment, “Journal of Law,



 Institutional, Cultural and Transaction Cost Inuences on Entry Mode

Choice and Performance



 Managing Disruption Risks in Supply Chains



 Innovation, organizational capabilities, and the born-global

rm



Waldemar Pierzchlewski, Halina Węgrzyn

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  Implementation of Strategic Human Resource Management Practices:

A Review of the National Scientic Production and New Research Directions, “Re-





Hamadamin H.H., Atan T., The Impact of Strategic Human Resource Management

Practices on Competitive Advantage Sustainability: The Mediation of Human Capi-

tal Development and Employee Commitment



Hamouche S., Human Resource Management and the COVID-19 Crisis: Implications,

Challenges, Opportunities, and Future Organizational Directions, “Journal of Mana-

-



Johansson M., Olhager J., Manufacturing Relocation of Plants to and from Sweden –

Extent, Characteristics and Performance, “Journal of Manufacturing Technology Ma-

        



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Perspectives on Nearshoring Industrial Production from China…

Santacreu A.M., LaBelle J., Supply Chain Disruptions and Ination During COVID-19,



Summary

In the face of dynamic changes in the global market, nearshoring is becom-

ing an increasingly important element of business strategies aimed at optimising

supply chains. As the analysis in this article has shown, relocating industrial

-

-

ucts with consumer demands. Although this process involves challenges such as

adapting to environmental regulations or managing labour costs, the opportuni-

ties it presents are substantial.

-

ute to sustainable growth, enhancing companies’ competitiveness on the inter-

national stage. However, to fully realize the potential of nearshoring, companies

must engage in continuous monitoring and analysis of market trends, adapting

their operations to the rapidly changing conditions of the global economy. Giv-

en these facts, businesses that embrace these challenges are paving the way for





element enabling companies to achieve long-term competitive advantage.

The growing interest in nearshoring as a key component in global strategies

heralds a new era in supply chain management. As companies prioritise great-

-

creasingly attractive option, helping to meet modern economic, environmental

and social challenges.

By locating production closer to key markets, companies not only reduce de-

livery times and transportation costs but also increase their ability to quickly





regulatory requirements and social expectations concerning sustainable devel-

opment.

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Waldemar Pierzchlewski, Halina Węgrzyn



in the internal processes of the company and its external business relationships.

This requires strategic planning, innovation and continuous improvement, which





integration and collaboration with local markets, which may be crucial for main-

taining competitiveness in a rapidly changing global environment.

Decisions regarding nearshoring should be made with careful consideration of



ability to adapt and innovate in response to global challenges will determine



      -

bility.

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