Why Did Cao Dewang Build a Factory in the U.S. While Elon Musk Came to China?

At 70 years old, Cao Dewang, Chairman of Fuyao Glass, made headlines by stating, “Apart from labor, everything in China is more expensive than in the U.S.” Fuyao Glass, China’s largest glass manufacturer, invested heavily in a massive factory in Ohio, large enough to fit 41 football fields and creating 2,500 jobs. Cao’s total U.S. investment is nearly $1 billion, including facilities in Illinois and Michigan.

Cao explained the cost differences between China and the U.S.:

Tax Rates: The U.S. has no VAT, only a 35% income tax plus local taxes (about 40% total), making profits higher in the U.S.

Land Costs: Industrial land in the U.S. is nearly free.

Energy Costs: Electricity is half the price, and natural gas is only 20% of China’s cost.

Transport Costs: U.S. transport costs are less than 1 RMB per kilometer, much lower than China’s high toll fees.

Labor Costs: Blue-collar wages are 8 times higher in the U.S., while white-collar wages are only double. However, China’s labor costs have surged, with wages at Fuyao tripling in four years.

Cao’s detailed calculations show that producing laminated glass in China costs 1.2 RMB per piece, while in the U.S., it costs 5.5 RMB. Due to export taxes and other factors, overall profitability in the U.S. is 10% higher.

Cao criticized overly optimistic economic forecasts and called for practical changes. Supporting this view, Tianjin University professor Li Weiguang introduced the term “Death Tax Rate,” suggesting that China’s macro tax burden, reaching 37% in 2015, is stifling business innovation and investment.

Cao Dewang’s move to the U.S. highlights the challenges faced by Chinese manufacturers, including high taxes, expensive resources, and rising labor costs. Meanwhile, Elon Musk’s expansion into China is driven by access to the vast market and efficient supply chains, showcasing the different motivations of global business leaders.