Supply Excellence — China Sourcing: Bargains Still Available, If You Know Where to Look

China Sourcing: Bargains Still Available, If You Know Where to Look

August 10th, 2007 · by Tim Minahan · No Comments · LCCS and trade, automotive sector, best practices

Earlier this week, I turned Supply Excellence readers onto an informative new Boston Consulting Group (BCG) study, The report offers a wealth of insight and some of the most actionable strategies I’ve seen for successful China sourcing.

Importantly, BCG recommends different strategies depending upon your company’s level of maturity in sourcing in China — from “Testing the Waters” and “Early Engagement” to “Full Integration” and “Making China a Center.” I couldn’t do justice to reviewing these strategies in a single post. So, I encourage you to read the full report.

However, I can share with you some of BCG’s key findings on the category-specific opportunities available in China today. According to the report, “industries are leveraging China differently, reflecting varying levels of supply base development.”

For example, BCG found that the Chinese supply base for electronic components to be very well established, “thanks to extensive development [of Chinese suppliers] in the 1980s and 1990s.” By contrast, “China’s automotive supply base is still at an early stage of development.”

That’s why automakers like Chrysler and Fiat are putting so much hope in its joint-ventures with local Chinese automakers like Chery. It’s also reflective of General Motors’ recent accusations that former-partner Chery copied its Chevy Spark and reselling it in China under the Chery QQ brand. (Hey, if I were GM, I’d be flattered that someone thought enough of the Spark to copy it.) But, I digress.

BCG has compiled a range of total landed costs savings reported by companies sourcing from China in the handy chart below:

Click image to enlarge.

Hear more China and Low Cost Country Sourcing (LCCS) best practices at Empower 2007. Supply management executives from ITT Industries, HAVI Solutions, Erico, and others will share their China sourcing best practices and lessons learned on Empower’s Global Sourcing Track. To register or for more information on Empower 2007, click here.

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