4 responses so far ↓

• 1 Walt Buczynski // Mar 6, 2008 at 4:38 am

  Missing the Point: where is the power of the world migrating? LCC is getting old, and China and India, as is Brazil are key areas to get your feet wet. Having been in China for over 4 years, it is a place to go and get relationships going now (albeit difficult to do at times). Understanding the culture, good and bad, provides the insite for years of business to come. AS I live just outside of Hong Kong, labor there is expensive to set things up, and many of the HK companies are on the mainland with their operations. HK is fun but expensive. Looking for a coastal city, try Xiamen, great area, milder climate (some typhoons), good port, and nice beach.
  LCC is not the key in the next 10 years or even 5. Do you want to be in a world mainstream economy or not??

• 2 Jason Busch // Mar 6, 2008 at 9:15 am

  Spot on, Walter. The only reason to be in China for the long-term — whatever time frame you put on it — is to be there to serve the potentially largest consumer market in the world. Near-term, there will always be some arbitrage opportunities based on currency (e.g., the strength of the Euro), labor, material costs, government incentives, etc., but those opportunities will become less and less lucrative over time. Stop chasing savings and start chasing overall country competitiveness I say!

  In regards to Hong Kong, I do not take any global sourcing operation — or trading company — seriously anymore that puts its HQ there. Too expensive and out of touch with the mainland, though I agree, a beautiful city. But China is not HK. BTW … a good friend of mine who might be reading this blog I hope will very soon be getting engaged to a wonderful person. Bachelor party will be in HK, ELJ, if you’re so inclined (and Walter, you’re invited to crash the festivities as well). There is no better city in the world to spend 48 hours.

• 3 Carol Pilarski // Mar 6, 2008 at 2:25 pm

  Gentlemen,

  Some interesting and valid points - and as a new contributor it’s great to see signs of life on my post.

  It may be that the term Low Cost Country Sourcing - and the chase for savings it invariably implies - is ready for the shelf. However, I think most would agree that businesses have gone global for the long term - and therefore so must sourcing. But as your comments both indicate, the point could’ve been clearer regarding the how and where. Doing your homework ultimately refers to understanding and measuring your supply chain as well as factoring in the key value drivers for your market (e.g. time to market vs. innovation vs lowest cost). These are the things that should drive the business decision of where to source from.

  Incidentally, there were some similar though-provoking discussions between the doctor and Dick Locke last year, regarding the concepts of “home country sourcing” and “best country sourcing.”

  My congratulations to the potential groom - that’s always happy news.

  And finally… while you’ll very rarely see me use “boondoggle” and “budget” in the same sentence… Xiamen sound positively lovely - typhoons and all!

• 4 Brian Jennings // Mar 21, 2008 at 11:49 am

  Just a casual observer here but I have a genuine interest and general competency in the dynamics of the global market in particular under developed and emerging markets.

  Very good input from all posters. I don’t believe LCCS is going anywhere as the methods and objectives, much like lean will have to become a part of global corporate competency/approach to compete in the global marketplace. The geographies will shift and change as the underdeveloped, emerge and the emerging become developed, the relative balance and definition of LC will shift as well. What region will begin to constitute a LCCS opportunity as China begins to develop more sophisticated capitalistic / economic positions and emerge into a more developed economy? Will Latin America and Eastern Europe continue to move into that position as China moves out? Currently, a major phase of LCCS is blowing through with the emergence of China and India and the market is going thru a healthy correction but what constitutes a LCCS opportunity will begin to float around the global economy as the global organism continues to evolve. It will continue to be important for MNC’s to understand how to interpret and navigate the LCCS arena. Low is a relative term so its interpretation will require an ongoing, dynamic approach. Surely as the playing field continues to level, we may see a much stronger move toward a regionalized supply chain as the logistics / trade costs and risk do not justify the savings in the mid-long term. It will be increasingly important for the companies continuing to stretch out globally, that they have one finger on the “value driver” and another finger on the pulse of the global geo-political environment that will shape and define how best to position to deliver that value driver. Not just reactionary measures but understanding political, financial, economic positions that will trickle down into value driver threats or opportunities. ie what global movements lead to the weakening of the dollar and the strengthening of the euro (predictable) so that companies can position to stay in front of potention issues / opportunities before they materialize. Any thoughts on Africa?

  Thanks.

  General thoughts from a casual observer

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