Outsourcing in China
cannot ignore China; it will not go away! It is therefore essential that
a company analyses what impact China might have on its business and plan
accordingly. Many companies will want to investigate outsourcing in China
as a solution to competitive pressures. Outsourcing from China is attractive
because of the country's low labour costs; the average unskilled industrial
wage is around US$120 per month.
a company buys products from China does not mean that it is being unpatriotic!
Competitors have been buying from China for many years and many have kept
it quiet because they do not wish to betray a source of competitive advantage.
And these advantages can be huge. McKinsey's Global Institute estimates
that by reorganising its production intelligently through outsourcing,
a multi-national firm can hope to lower its costs by as much as 50-70%.
from China brings many benefits:
labour reduces production costs
keeps the company competitive, raises profits and reduces prices as
lower costs are passed, at least in part, to customers
profits and lower prices lift demand for products
key success factors for an outsourcing project are:
the right partner
a relationship with suppliers
a structural approach within an overall company strategy
intellectual property rights Business Development International can
advise on and assist in developing strategies to enable companies to
obtain the real benefits of outsourcing from China.