To understand the scope of the phenomenon that is today known as Reshoring, We must begin with the historical period – the dawn of the new millennium – when Western industry confidently embarked on the path of relocating production to Asian markets; this is why China, Taiwan, South Korea, Malaysia, and Vietnam became the primary recipients of European and North American manufacturing investments. The motive was essentially economic, due to factors such as access to low-cost labour, favourable taxation, and less stringent regulatory systems.
The electrical and electronic products sector was among the most profoundly affected by this transformation. From electronic boards to semiconductors, from consumer devices to automotive and aerospace electronics, value chains shifted thousands of kilometres away from the final market. However, as often happens in industrial history, what had initially presented itself as a structural advantage ultimately proved, over time, a systemic vulnerability.
Before analysing the dynamics in play, it is appropriate to precisely distinguish the different movements of production relocation, terms which in public debate are often used interchangeably, generating no little confusion.
The Reshoring indicates, in a broad sense, the reallocation of production centres to geographical areas closer to the target market, without necessarily implying a return to the company's country of origin. The Backshoring is, however, the process by which a company reports production precisely in the country it had been relocated from; this, then, is a “return home” in the strict sense. The nearshoring Describe the relocation of production to third countries but geographically close; For example, for a German company, this could mean moving production to Poland or Romania instead of China.
Reshoring itself presents itself as a multidimensional phenomenon that responds to Endogenous factors – therefore linked to the business strategy – and exogenous, namely those dictated by the changing global competitive and geopolitical context. But what were the global-scale movements driving the process of reshoring production?
The factors that reversed the offshoring trend
The turning point wasn't sudden, but its most obvious catalyst was, as one might imagine, the The Covid-19 pandemic. Global supply chain disruptions have exposed the fragility of a hyper-specialised and geographically concentrated production model. The electronics sector has been particularly hard hit by this crisis, because the global shortage of chips and semiconductors – products made almost entirely in Asia – has paralysed entire industrial sectors, from automotive to consumer electronics, with effects that have lasted for years.
This was added to Trade war between the United States and China, with the introduction of duties and barriers that have progressively eroded the economic advantages of offshoring. In parallel, the cost of labour in Asian countries has undergone physiological increases over the last two decades, further reducing the competitive differential that originally justified offshoring. Added to this the increase in energy and freight transport costs, geopolitical instability and the increasing regulatory burden related to the environmental sustainability of global logistics.
In these years, furthermore, the strategic dimension The operations of Asian companies have changed significantly, because – having acquired sophisticated know-how over time – they no longer just produce on commission, but compete directly in Western markets with technologically advanced products.
These factors have prompted a swift and decisive institutional response, as exemplified by the European Chips Act launched by the European Commission. The measure mobilises €43 billion in public and private funds with the aim of increasing Europe’s share of global semiconductor production from the current 10.1% to 20.1% by 2030. The aim is to reduce dependence on Asian supplies and bring back to Europe strategic manufacturing expertise that was at risk of being lost forever.
The concrete advantages of relocating production
The Manufacturing reshoring in the electronics sector provides benefits that go far beyond reducing supply risk. Firstly, it should be noted that the The reduction in logistics costs is immediate because shorter distribution distances translate to lower shipping costs, reduced customs fees, and noticeably faster delivery times. This latter point is particularly relevant in an increasingly customisation-oriented market, and Fast delivery, where the end customer is not willing to wait weeks for a personalised product.
Quality control returns to the company., as geographical proximity allows for more frequent inspections, direct communication with production and a responsiveness that the offshore model, by definition, cannot guarantee. The brand strengthening it is an asset that is difficult to quantify but of great commercial relevance. The growing sensitivity of institutional buyers towards product provenance, supply chain traceability and the environmental responsibility of production transforms “made in Europe” - and “made in Italy” in particular - into added value that translates into higher margins and customer loyalty.
Finally, a strengthening is observed supply chain resilience, because a shorter and more diversified supply chain is structurally less exposed to the exogenous shocks that in recent years have shown they can bring even the most structured organisations to their knees.
Challenges and capabilities for planning the transition
As is intuitive, reshoring doesn't present itself as a path without obstacles, because companies are called upon to confront costs of plant recapitalisation, with the difficulty of obtaining Specialist technical staff and with the need to to rebuild local supply chains. These are key elements to manage which require accurate strategic planning and, clearly, an adequate time horizon.
The transition therefore needs a progressive approach – which envisages as a first step the diversification of production capacity, ideally maintaining an offshore share while consolidating the local one – and can represent a viable path for many small and medium-sized electronic companies.
Automation plays a leading enabling role in this context, allowing for partial compensation of the labour cost differential compared to low-wage countries, making Economically sustainable a European production that until a few years ago would have seemed unfeasible.
Certifications: The mandatory step to compete and guarantee quality
In this scenario of production re-positioning, there's one aspect that companies cannot overlook, which is Regulatory compliance and product certification. Bringing production back to Europe means, as is well known, facing a complex regulatory framework, dictated by European directives, safety requirements, electromagnetic compatibility regulations, restrictions on the use of hazardous substances, ecodesign obligations. For an electronic or electrical product intended for the European, North American and British markets, every single step of the life cycle – from design to production, up to market launch – must be tested and certified.
It is here that Sicom Testing acts as the go-to technical partner for companies in the sector. With a range of services Covering the full range of certification requirements, Sicom supports electronics manufacturers at every stage of the process: from CE marking and from FCC and Canada certification, until the necessary evidence, such as EMC tests, the Electrical safety checks, the radio tests, the evidence of human exposure and SAR, compliance RoHS and the Ecodesign checks. Pre-testing sessions are also available during the product development phase to identify and rectify non-conformities before they result in rework costs or delays in bringing the product to market.
For those managing or planning a reshoring process, certification is not a bureaucratic burden, but the necessary condition for accessing markets, demonstrating to its clients that the quality of local production fully meets international standards. Integrating from the outset Reliable and competent certification partner in the production relocation plan means reducing risks and times, transforming compliance into an element of competitive advantage.
To request further information on this topic, write to info@sicomtesting.com
or call +39 0481 778931.
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