Why China now, and how
January 6th, 2009 by AdministratorA new article from DC Velocity magazine, which covers logistics and distribution news, asks, “Fleeing China? Look before you leap.”
The article looks back at the trouble facing China and the rest of the world during 2008 and analyzes how those challenges might affect 2009. Some suspect China to see a bit of a business exodus, but others disagree.
As for competition from other low-cost Asian contenders, Steve Ganster, senior vice president, Asia, for Tompkins Associates, a Raleigh, N.C., firm that advises mostly U.S.-based Fortune 500 and mid-size companies, has analyzed the costs of sourcing in nearby Vietnam and found that with the exception of savings in the value-added tax regimes, there is no appreciable benefit. India, he says, is hampered by an inferior infrastructure and a multilayered bureaucracy that makes it virtually impossible to develop and implement projects in a timely fashion.
“China is unparalleled in its economic scale and size for both exports and domestic demand,” says Ganster. “None of the countries we’ve looked at will be able to match China’s will and ability” to continue to make offshoring an attractive sourcing option.
Ganster advises companies now in China but mulling a shift in their sourcing plans to first examine ways to optimize their existing distribution networks. He says that might include more effective consolidation practices at origin or streamlined transportation strategies such as shipping direct to customers and bypassing warehouses and distribution centers in the United States.
Read the full article here.
In other news, the December/January issue of Supply & Demand Chain Executive magazine contains an article written by Steve, titled “The China-ready Supply Chain.” Here’s the intro:
For a successful supply chain in which China is a main source of your raw materials or destination for finished goods, you need to operate in a high state of readiness. The combination of stark differences in business systems with the West, long travel distances, and constant and sometimes turbulent change make it imperative that you have a “China-ready supply chain.” This article first describes why your supply chain needs to be “ready” and then discusses the key attributes that indicate a high degree of readiness for doing business well with China and getting excellent performance from your supply chain.
Read the full article here.
