Around the world, manufacturers are warily eyeing recent events in China’s industrial sector, unsure of the capacity of the world’s industrial giant to move forward. This summer’s tragic explosions in Tianjin and a rise in the manufacturing sectors of Vietnam, Bangladesh and Cambodia all appear to point to the decline of China as the world’s best supply chain contracting base. However, even as the country wrestles with the regulatory gaps that contributed to the explosions, other factors inherent in the country’s manufacturing supremacy continue to shine, and ensure that it will remain the world’s number one manufacturing hub for quite some time.
China Remains the Foundation of “Factory Asia“:
Despite the many other countries now vying for contracts throughout this Southeast Asia region, China retains infrastructural assets that will prevent those countries from topping its attractiveness to international manufacturers.
Supply Chain Developments:
For the past 30 years, the country has developed a complex and profitable “intermediate inputs” sector – those goods that are pieced together in other factories to create a final product. In 2012, China’s supply chain base accounted for 50% of global trade in those inputs.
“Made in China” Remains a Dominant Label:
More recent evolution within the country’s technology and transportation sectors also contribute to its place at the top. Since 2010, the percentage of China-made intermediate inputs has also grown, from 40% in the mid-1990’s to 65% today. That means China itself contributes a significant portion of the parts that make up the final product, regardless of where it’s final assembly occurs.
Transportation Opens New Opportunities:
As Chinese employees in developed hubs are now demanding higher wages, China is expanding its industrial footprint to include inland provinces that are open for development. Railways have been added to transport goods from factories situated farther inland, in towns with abundant (low cost) labor forces. It is also immensely beneficial to the manufacturing world in general that six of the world’s ten most productive ports lie within China’s borders.
China now produces internally a high percentage of all the world’s goods and has the transportation infrastructure in place to successfully move them where they need to go.
China’s Complexity Requires Comprehension and Strategy:
I wrote my book, “Red Flag: Your Guide to Risk Management When Buying in China,” to highlight and explain the challenges posed to all international enterprises when they elect to contract with China’s manufacturers. I’ve structured the book to appeal to all levels of international personnel, from CEO’s and global compliance management to spouses and family members of international administrators based in China. For anyone who does not have a long experience with the Chinese manufacturing culture, the book will provide a clear and comprehensive explanation of how that culture differs from everything they know about their industry and enterprise.
Most importantly, information from the book can prepare you for your dealings with your chinese suppliers, to reduce confusion and clarify misconceptions. My focus is on improving the bottom line through a reduction of losses and an increased brand value. This is achieved through reduction of the loss of, or damage to, goods produced in China. In the book, I provide explanations and examples of common practices that are most likely to create risks of both.
My unique perspective on global industry began with my degree in Economics and International Business from the Copenhagen Business School. My work experience in the Oil and Gas, Automotive, Food and Weather Risk mitigation industries moved me from Denmark to Barcelona, Tokyo, Shenzhen, Hong Kong and finally – now my home base – Sydney, Australia. I have worked with global market leaders such as ALDI Supermarkets and Lindt Chocolate to assure their supply chains are responsive to their needs and comply with all required commercial and international regulations.
I am confident that my book and the experiences I describe can assist you and your business to quickly and assuredly secure a higher level of cooperation and a reduced risk profile for you as a result. To get your copy, contact me today.
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