Supply Excellence — Live from LIVE: Where is China headed?

Live from LIVE: Where is China headed?

May 16th, 2008 · by Justin Fogarty · No Comments · AribaLIVE, LCCS and trade, automotive sector, sourcing, supply management

As you’d probably expect of any discussion of Low-Cost Country Sourcing (LCCS), Tuesday’s breakout session on LCCS 2.0 revolved largely around China. Everyone always wants to know where China is headed? And what’s the next China? I wouldn’t say there were definitive answers to either of those questions from the panel, which included V.N. Bedekar, former GM of Tata Motors, Linda Parcher, CPO at Diebold, and Dan Douglas, Emerson’s Global Sourcing Manager. But there were definitely some interesting points I should share:

Chinese suppliers are very concerned about the devaluation of the US$, as Linda Parcher pointed out. After a couple of years of eating the rising costs brought on by the dollars’ demise, Chinese firms have begun requesting price increases.
According to Dan Douglas, coastal China is literally “no longer a low-cost country, we’ve moved west.” But when it comes to predicting the next China, Vietnam, Mexico, Poland and Turkey were the countries named by the panel.
Indian consumers, like those in the US, are skeptical of the quality of goods coming from China and they resent the perceived loss of jobs. As a result of the Indian government’s protectionist policies and consumers’ demand for Indian made products, Tata Motors has only utilized China for about 10% of their supply chain. Surely the fact that India is also a fairly low-cost country weighs into the financials behind this decision. But if the relative cost of doing business in the US continues to drop and protectionist politics take hold, could the US also begin to pull away from China?

Justin Fogarty is Managing Editor of Supply Excellence and will be covering Ariba LIVE 2008 from Las Vegas this week. Any questions or feedback about the event or this blog can be sent to Justin at jfogarty[at]ariba[dot]com.

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