Sourcing in China. Strategies, methods and experiences

Various works have been published in the last years focused on Chinese economic and political geography, as well as on themes connected to Chinese (Asian) business (legislation, negotiating style, etc.) contexts. However the literature lacks contributions that address the managerial aspects involved in the development of a production and supply base in China and the corresponding supply chain management issue. This development is a complex task in a social, cultural and normative context so distant from our own. A number of obstacles need to be overcome: the language, the cultural and geographic distance, the coordination of an international logistic net, the transfer of technological capabilities and managerial praxes, and the quality monitoring at source. This book summarised the main findings of the EU project "International Sourcing Strategies for China" focused on the above mentioned aspects. This project was coordinated by the authors in collaboration with partners belonging to the "Otto-von-Guericke" University of Magdeburg (Germany), the Beijing National Centre for Science and Technology Evaluation (NCSTE) (the main Chinese ministerial agency specialised in the assessment of scientific and technological programs), and finally INNOVA, a leading Italian company for technological transfer and strategic advising. Aware of the growing importance of the Chinese market, the European Union has activated the program "Asia Information Technologies & Communication", whose aim is to promote the identification of organizational solutions and ICT instruments for the effective management of the supply chains that join Europe and China. A sample of European enterprises was analysed, selected according to two criteria. These enterprises belong to industries where the EU-China interchange is most relevant. In addition, there units are in some way exemplary in their ability to take advantage of the opportunities offered by the international chessboards, where the careful and systematic resort to the sourcing opportunities offered by emerging countries is at times responsible for major buying advantages, extraordinarily fast increase rates, and sometimes even for a radical modification of the business. In greater detail, the structure of the book is the following. Chapter 1 reviews the papers published on international sourcing (IS). Determinants and problems, forms, development paths, and management practices of IS are illustrated following an extensive analysis of the literature. Chapter 2 briefly describes the main events that have characterized the recent history of China. Then it sketches a geo-economic picture of the country. The most important economic indicators are listed, that reveal how this country is assuming a more and more important role inside the international trading community. Chapter 3 points out objectives and methodology of the project "International Sourcing Strategies for China" from which this book draws its origin. After a short account of the samples, motives, advantages and obstacles underlying the choice of China as a sourcing base are described. Chapter 4 shows a taxonomy of the sourcing typologies of the sample. Each typology is described in terms of industry, purchasing code, organisational requirements, key competences, and characteristics of the relationship with the Chinese interlocutors. Chapter 5 indicates some methodologies that could be useful when choosing and planning the establishment of a sourcing channel in the Chinese market. A normative model is proposed that suggests the best suited typology depending on the key context variables (company size and purchasing volumes, complexity of the Chinese industrial context, and the complexity of the purchase code). Then the sequence of steps and activities involved in the development of a sourcing channel and an International Purchasing Office are listed. Chapter 6 details some of the most critical aspects of IS in China: the role of intermediaries, organizational decentralization, Chinese relational logic and negotiation style, the technology and know how transfer. Chapter 7 summarises modalities and legislative constrains that discipline foreign investments in China. Main forms and historical course of foreign investments, fiscal facilities and instruments for the defence of the intellectual property are briefly depicted. Chapter 8 gives a description of transport infrastructures in China. The evolution of the transport systems and the current situation of rail, air, road and naval infrastructures are illustrated.