offshore production

offshore production

the devolvement, by a MULTINATIONAL ENTERPRISE engaged in the manufacture of a final product in a particular country, of part of its production operations to one or more of its overseas plants. In its strictest sense the term ‘offshore production’ refers specifically to the production overseas of components which are then exported and incorporated into the final product at the firm's main plant. With the increasing globalization of multinational firms' activities, the term is sometimes used also to describe the overseas production of some of the firm's final products which are then exported and sold alongside the firm's locally produced items as part of a comprehensive product range offering. Offshore production is undertaken primarily to enable a firm to maintain its international competitiveness by taking advantage of the lower labour costs of, and the financial subsidies offered by, HOST COUNTRIES wishing to attract FOREIGN INVESTMENT. See SOURCING.